Most Australian employers now fall under the jurisdiction of the
Fair Work Act 2009 and must apply the minimum safety net
provisions of the National Employment Standards and the applicable
Modern Award. With the Fair Work Act 2009 implementation process
having reached the the introduction of monetary rate provisions of
Modern Awards, it is timely to remind employers of their
obligations in a complex but fundamental and necessary area of
The following is a guide for all employers to assess their
With the introduction of State referral legislation in New South
Wales, Queensland, South Australia and Tasmania the Fair Work
Act 2009 applies to most employers. State Government
Departments, however, are not National System employers.
Each employer should assess the roles, duties and tasks of each
employee's position. This will enable you to select the most
appropriate Modern Award. The Fair Work website (www.fairwork.gov.au)
provides an ideal starting point for this process. Employers should
keep in mind that there is an award for almost all employees with
very few excluded. It is also prudent to remember that employees
are not necessarily excluded from award coverage when they are paid
in excess of the "high income threshold" (currently
The basic premise is that each employee must receive a minimum
of the National Employment Standards (NES) and in
most cases the terms of the Modern Award. Even if the employer
elects to enter into an enterprise agreement the basic conditions
of the NES and the modern award cannot be excluded to the employees
Almost all modern awards include provisions to
"transition" employers and employees from their
pre-existing entitlements to the modern award system. As an
employer you should check the modern awards which cover your
employees to determine the scope of the transitional provisions
that will be applicable to your business. In general the model
clause allows for employees to transition over a four year period
commencing on 1 July 2010 and ending on 1 July 2014.
Overpayment award payment absorption
In most cases employers who made overaward payments prior to 1
July 2010 are entitled to absorb the modern award increases into
their existing overpayment. This a complex issue and we recommend
that any employer seeking to rely on "absorption" seeks
legal advice to ensure their arrangements are lawful and to manage
their industrial relationships.
Individual flexibility arrangements
All modern awards include flexibility terms that allow employers
and employees to reach individual arrangements about specific terms
of employment. Such terms can be useful to both the employer and
employee. We recommend that employers seek specific advice when
using a flexibility arrangement.
In addition to the flexibility arrangements allowed by modern
awards, employers can continue to utilise common law contracts so
long as the employee is not excluded from the terms of the modern
award and the NES. Employers may also consider enterprise
agreements to enhance their flexibility and to best meet their
The Fair Work Ombudsman conducts investigations on behalf of
employees and also conducts audits of industry. Fines can be
imposed where employers fail to ensure that employees are paid
their minimum entitlements. We recommend that all employees
regularly audit their employment practices. We can provide
assistance to all employers in the implementation of modern awards
including the development of audit tools to assist with compliance
and also strategy and development of employee management
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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