Any employer or HR professional will tell you that navigating, interpreting and implementing the mishmash of Federal Awards, NAPSAs and state awards is anything but simple. Industrial Awards are often complicated, badly drafted and difficult to apply, creating excess administration, cost and headaches for employers.

However, in June this year the Federal Government promised all would soon change with the announcement of a new and improved nationally consistent modern award system.

Due for release in January 2010, the modern award system along with the 10 National Employment Standards (NES), will form the 'fair minimum safety net' for employees in the federal system.

The Government promises modern awards will be simple to follow, allow flexible and productive working practices and will not negatively impact either employer or employee.

The Government has given the Australian Industrial Relations Commission (AIRC) the job of simplifying and minimising the number of Industrial Awards.

14 Draft Awards

On 12 September, the AIRC released 14 draft modern awards for the 14 'priority sectors' which include clerical, retail, hospitality, mining, metal and associated industries, coal mining and security industries.

These draft awards give us our first glimpse at what modern awards will look like in the new system. Some of the key features of the draft awards of particular interest to employers are:

• A standard provision requiring employers to consult employees y yand their representatives about significant workplace change.
• Emphasis on resolution of disputes at the workplace level. If the dispute reaches the AIRC, the Award encourages parties to allow the AIRC the discretion and power to ensure settlement of the dispute.
• A standard 25% casual loading rate. In some areas, transitional yarrangements may be necessary to cushion the impact.
• Provisions for termination notice by employees and a job search leave entitlement.
• An extension of the modified redundancy scheme to small yemployers despite the government's policy to exempt businesses of fewer than 15 people.

Whilst Employer Groups and unions rarely agree on anything, the sounds of discontent could be heard from both camps after the release of the draft modern awards.

Concerns of employer groups

Impact of redundancy pay for small employers

Employer groups are concerned about the financial impact of the redundancy pay model award clause on small employers.

However, Minister Gillard has expressed concern about the cost of the scheme to small business, which may suggest that if the AIRC does not delete the provision, the Government may move to ban it through legislation.

Increased labour costs

A key aim of the reform is to create a system where only one or two awards apply to any single business. However, employer groups have complained the AIRC is reducing the number of awards by simply amalgamating the different awards into a smaller number without proper consideration of cost or industry impact.

The draft awards suggest that employees in some states will therefore receive more generous entitlements which will inevitably increase labour costs for employers. The National Retailing Association has said that if the draft award is implemented there will be an increase of labour costs of between 5% and 15% for mainstream retailers and up to 25% for takeaway food outlets.

Concern draft awards not flexible enough

The Australian Retailers Association has criticised the penalty rate structure in the modern awards as being inflexible and reminiscent of the 1960s regulated system of Monday to Friday working weeks.

Union concerns

The unions welcomed the return of the requirement to consult employees in the workplace and the introduction of mechanisms for settlement of workplace disputes by an independent umpire.However, the ACTU is concerned that in certain areas there is a reduction of conditions and that some employees will be worse off under the modern awards.

What employers should do

At this stage, employers should consider how the draft classifications might apply to their workplaces and whether rates and conditions in draft awards impose new costs that must now be budgeted for.

Fay Calderone is an Associate wtih MatthewsFolbigg Lawyers. For more information call: (02) 9806 7412 or e-mail: fayc@matthewsfolbigg.com.au