Key Points: Where an enterprise award exists, employers may need to
consider whether they wish to retain the enterprise award and, if
so, whether to seek its modernisation by Fair Work Australia or
whether they should negotiate a new enterprise
Employers need to be aware of the coverage provisions in modern
awards and the scope to modernise enterprise awards. Modernising
enterprise awards was not part of the original "Forward with
Fairness" policy, but it is now possible under transitional
Parties and award coverage
The concept of parties or respondents to awards, which existed
in the old federal award system under the Workplace Relations Act
1996, will no longer be relevant for modern awards that will
operate from 1 January 2010. Modern awards will bind national
system employers (which include most corporations, the
Commonwealth, a Commonwealth authority, an employer in a territory
and an employer in a state which has referred its industrial
relations powers to the Commonwealth) and employees by virtue of
the coverage clauses in the awards. This means that it will be very
important to consider the clauses in modern awards which deal with
coverage to determine which employees are covered by those awards.
Depending on coverage clauses, employers may need to apply
different modern awards to different employees.
Enterprise awards: can now be modernised
Despite the award modernisation process, enterprise awards may
remain in existence.
The original intention in the Forward with Fairness Policy was
that only industry and occupational awards would be modernised. The
award modernisation process commenced last year and is scheduled to
conclude by 31 December 2009. However, Fair Work transitional
legislation – the Fair Work (Transitional and
Consequential Amendments) Act 2009 - has included provision for
enterprise awards to be modernised on request.
Employers with enterprise awards will therefore need to consider
whether they wish to retain their enterprise award and, if so,
whether to modernise the enterprise award or, in the alternative,
whether to negotiate a new enterprise agreement.
Application to modernise enterprise awards
Only a person covered by an enterprise award may apply for the
award to be modernised.
The application period is limited: applications may be made at
any time after 1 July 2009 until the end of 2013.
Who may modernise enterprise awards?
Only a full bench of Fair Work Australia may make a modern
The factors Fair Work Australia must take into account in
deciding whether to modernise an enterprise award, and if so what
terms to include in the enterprise award, are set out in the
transitional legislation. They include:
the circumstances that led to the making of the enterprise
award rather than an instrument of more general application;
whether there is a modern award (other than the miscellaneous
modern award), or likely to be a modern award, that would cover the
persons who are covered by the enterprise award;
the content, or likely content, of that modern award;
the terms and conditions of employment applying in the industry
in which the persons covered by the enterprise award operate, and
the extent to which the enterprise award provides
enterprise-specific terms and conditions of employment;
the likely impact on the persons covered by the enterprise
award, of a decision to make, or not make, the modern enterprise
award, including any impact on the ongoing viability or
competitiveness of any enterprise carried on by those persons;
the views of the persons covered by the enterprise award;
any other matter prescribed by the regulations.
Implications for employers
Employers should seek advice about their award obligations from
1 January 2010, whether they are bound by a modern award or awards
and which modern award or awards are applicable to their
Where an enterprise award exists, employers may need to consider
whether they wish to retain the enterprise award and, if so,
whether to seek its modernisation by Fair Work Australia or whether
they should negotiate a new enterprise agreement. These options,
and their legal implications and implementation, will need to be
carefully considered by employers.
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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