The Australian Industrial Relations Commission
(AIRC) is currently undergoing the process of
creating a set of modern awards based upon broad industries and
occupations, which will replace several thousand existing federal
and state awards. These awards will operate from 1 January 2010 and
will supplement the National Employment Standards.
Recently, the Shadow IR spokesman, Michael Keenan called on the
government to reconsider the process, saying that the award
modernisation process will increase labour costs by up to 22% and
lead to job losses. So what is the process, and how will if affect
What does the award modernisation process involve?
The aim of the award modernisation process is to create a
comprehensive set of modern awards along industry or occupational
lines, dealing with essential matters. These essential matters
the type of work to be performed
overtime and penalty rates
salaried arrangements (where appropriate)
leave and leave loading
and other matters including conditions of employment for
outworkers and industry specific redundancy schemes.
Modern awards must also include a flexibility term permitting
employers and individual employees to negotiate individual
agreements on certain matters.
Under the Workplace Relations Act 1996 (Cth), the
matters that must not be included in modern awards include terms
about deductions and payments for the benefit of an employer, long
service leave, right of entry, discriminatory terms, or terms that
apply differently in different states (subject to a transitional
period of five years in which some terms of this type may be
The award modernisation process will not affect enterprise based
How is the award modernisation process being implemented?
The award modernisation process is being implemented by a Full
Bench of the AIRC in four stages, which commenced in July last year
and will finish in December this year.
The AIRC has already released a number of awards for the Stage 1
"priority industries", including coal mining, fast food,
retail and hairdressing, manufacturing, hospitality, racing,
security services, higher education, private sector clerical
employees and, the textile, clothing and footwear industries.
Consultation is currently occurring between the AIRC and
affected parties about the Stage 2 and Stage 3 industries and the
form of awards that should apply. To see a full list of the
industries that are being considered by the AIRC in each stage click here.
How will the award modernisation process affect your
The award modernisation process:
could have the affect of significantly rationalising the awards
which apply to an employer (particularly where a number of state
awards have traditionally regulated the business)
could potentially extend award coverage to employees who have
traditionally been award free (but is not intended to extend award
coverage to managerial employees who have been traditionally award
free or high income employees with a guaranteed annual income above
a certain amount (expected to be $100,000).
As identified by Michael Keenan, the indications to date are
that the award modernisation process could increase labour costs
for some employers by 22%, although the precise effect of the award
modernisation process on business is yet to be known.
What should employers do?
monitor the award modernisation process as it affects their
review applicable modern awards as they are released and assess
the impact of these awards on their businesses
consider whether they should enter into workplace agreements
now so as to replace the application of the modern award whilst the
workplace agreements are in operation.
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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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Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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