On 1 January 2010 the modern award system provided for in the
Fair Work Act 2009 will come into effect.
Employers must ensure that where a modern award applies to their
employees, the terms and conditions provided to those employees are
at least as favourable as those set out in the modern award.
Failure to comply with requirements set out in an applicable modern
award could expose employers to penalties of up to A$33,000 per
Key issues for employers include:
Will your business be covered by a modern award?
Modern awards have been drafted to apply in a variety of
industries and occupations. If your business is currently covered
by an award it is likely that it will be covered by a modern award
from 1 January 2010. Even if your business is not currently covered
by an award, it is still possible that a new modern award or the
new Miscellaneous Award 2010 could apply to your business.
Will entitlements change under modern awards?
Most modern awards consolidate and standardise entitlements from
a number of current state and federal awards. For this reason it is
highly likely that there will be conditions provided for in modern
awards which did not previously apply. It is therefore vital that
employers carefully review the entitlements contained in any
applicable modern award and compare these with existing
entitlements. Employers cannot assume that it is business as
Will high income earners be excluded?
High income employees are not automatically excluded from modern
award coverage. However, it is possible for employers to exclude
high income employees from the coverage of a modern award by
entering into a "guarantee of annual earnings" with the
employee. A guarantee of annual earnings is an undertaking from an
employer that it will guarantee annual earnings to the employee
above the high income threshold of A$108,300.
What flexibility is available to employers?
Although the flexibility of individual statutory agreements is
no longer available to employers, there are a number of mechanisms
which can assist employers to achieve flexibility in the terms and
conditions of employment offered to award employees. For example,
under the Clerks – Private Sector Award 2010 and
the Banking, Finance and Insurance Award 2010, employers
may elect to pay employees an annual salary in satisfaction of the
minimum wages rates, allowances, penalty rates and annual leave
loading contained in the Award. In addition all modern awards
provide a mechanism for individual agreement whereby provided the
employee is better off overall, employers and employees may agree
to vary certain terms of an award to meet the individual needs of
the employer or employee by entering into an Individual Flexibility
Do employers need to comply from 1 January 2010?
The modern award system commences operation from 1 January 2010.
However, in order to alleviate the impact of award modernisation of
employers and employees, a number of awards will include
transitional provisions which will phase in award increases and
decreases relating to monetary obligations over a five year period.
Employers will need to check the provisions of the modern award
applicable to their business to ascertain if transitional
provisions will apply.
What should employers do?
Ascertain whether any modern awards apply to employees.
Compare modern award entitlements with those currently
Consider the merits of entering into individual flexibility
agreements, annualised salary arrangements or guarantees of annual
Ensure that employees covered by a modern award receive the
entitlements contained in that award.
If you require assistance in relation to the introduction of
modern awards or other workplace relations matters please contact
one of the Middletons Workplace Relations & Safety team.
Welcome to our new members
The Middletons Workplace Relations & Safety Group has
experienced significant growth in the past month with the arrival
of Kathy Dalton, Partner, Michaela Moloney, Special Counsel and
Martin Alden, Senior Associate.
Middletons has one of the leading Workplace Relations &
Safety teams in Australia and is currently advising employers,
government bodies, small business and insurers on the impact of the
Fair Work Act.
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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