The Australian Industrial Relations Commission
(AIRC) has the significant task of modernising
awards. This process is scheduled for completion by 31 December
2009, to coincide with the implementation of Fair Work Australia.
The purpose of the award modernisation process is to provide a
simpler system of workplace regulation, primarily achieved by
implementing national industry-based awards cobbled together from
existing Federal Awards and the host of state awards brought into
the Federal industrial regime as Notional Agreements Preserving
State Awards (NAPSAs) at commencement of Work
Choices in March 2006.
Section 576J of the Workplace Relations Act 1996 (Cth)
(the Act) sets out a list of 10 matters that may
be dealt with by modern awards. Section 576J(1)(i) states that a
modern award may include terms about superannuation. Originally, it
was conceived that superannuation terms in awards would cease to be
allowable award terms on 1 July 2008, thereby giving all employers
the ability to choose the default fund for their employees.
However, the provision allowing for the lapse of superannuation
terms in awards was repealed on 28 March 2008. At the same time,
superannuation terms were included as allowable terms in modernised
awards. Accordingly, award superannuation terms are here to stay,
and employers bound by modernised Federal Awards will not have the
freedom of choosing their own default fund.
The AIRC also has the task of creating a model flexibility
clause. The matters included in the flexibility clause will be able
to be modified by employers to suit their particular employment
relationships. Whilst superannuation is one of the 10 matters that
may be dealt with by modern awards, it is not to be included in the
model flexibility clause. It was decided by the Commission that the
ability to vary or apply flexibility to superannuation obligations
would add complexity and unnecessary regulation.
In relation to the issue of superannuation under modern awards,
Senator Nick Sherry wrote to the AIRC's President in July
requesting that the Commission maintain the practice of nominating
default funds when it modernises awards. He further urged the
Commission to encourage parties to each award to consider
individual fund performance when determining the default fund.
Senator Sherry advised that most employees under federal awards and
NAPSAs did not exercise choice, so the default fund took on more
importance. In his letter to the Commission, Senator Sherry
referred to unpublished Australian Prudential Regulation Authority
(APRA) data which showed that "two in three
member accounts in the best performing quartile [of super funds]
are members of industry funds, and by contrast five in six member
accounts in the fourth, or worst performing, quartile, are in
Senator Sherry voiced concerns over the fact that the default
fund for a minority of industries performed relatively poorly. This
poor performance had serious implications for retirement lump sums.
He further wrote, "...while strongly supporting the
continuation of the nomination of default funds in awards, I urge
the Commission to ask the parties to awards to consider the
performance of the superannuation fund specified in their award
when they conduct consultations for the award modernisation
Senator Sherry went on to recommend that parties to a particular
award form panels of experts "to compile a set of principles
to underpin criteria for a list of well performing funds that can
be chosen as the default funds for awards." Senator Sherry
offered the assistance of APRA and any expert panel "in order
to facilitate access to fund return data to aid in the research,
analysis, and development of principles."
Industries/occupations currently under investigation by
the AIRC for the purposes of award modernisation:
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.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).