Modern awards: Are changes 'inevitable' for Australian employers?

Further modernisation is needed to ensure employers know their responsibilities and avoid court costs

Modern awards: Are changes 'inevitable' for Australian employers?

Workers around the country can expect the new Commonwealth Government to sympathise with their cause after the creation of the Department of Workplace Relations. This new department will be established to ‘administer the government’s workplace relations, jobs, skills and training’. It is only a matter of time before several inquiries are established.

Whether this instigates changes to the Fair Work Act 2009 remains to be seen but there are pressing issues for the new government to address. The Fair Work Act 2009 provides the minimum terms and conditions for the majority of employees in Australia that are covered by the national workplace relations system. Another area of contention under the Fair Work Commission is the Modern Award 2010, which covers the minimum terms and conditions of employment on top of the National Employment Standards (NES). Modern awards cover pay, hours of work, rosters, breaks, allowance, penalty rates and overtime.

“The introduction of Modern Awards in 2010, after an extensive simplification process, was long over-due and has provided significant assistance to employers in regulating the needs of their workforce,” Anthony Maher, director of BlueRock Law’s commercial team, who has significant experience in employment and commercial matters, said. “However, arguably there is a need for further modernisation of Awards to ensure employers, especially those of small businesses, are able to clearly interpret their responsibilities and the minimum terms and conditions of employment which must be offered.

“Particularly within the construction and hospitality industry, there is a need to ensure greater clarity surrounding which awards apply to the workplace. Simplification of these awards is crucial to ensure employers do not place unnecessary risk on themselves due to the current complexity of certain Modern Awards.”

Modern awards apply to all employees covered by the national workplace relations system. Modern awards are industry or occupation-based and apply to employers and employees who perform work covered by the award.

But managers or higher income employees may not be covered by a modern award even if one applies to the industry in which they work. Furthermore, If the business is covered by a registered agreement, it is usually the case that the conditions of a modern award are no longer relevant, however, if the base rates of pay in an agreement are lower than those in the relevant modern award, the base rates of pay in the modern award will apply.

Some employers and employees will not be covered by an award or registered agreement. When an employee is not covered by an award of agreement, they are considered to be award and agreement fee. In these situations, the National Minimum Wage and the NES will form the minimum terms and conditions of employment.

Other areas

Long Service Leave for employees is another contentious issue that the Commonwealth Government might want to address, which is complicated by individual states and territory laws.

“In Australia, entitlements to Long Service Leave are complex,” Maher said. “An entitlement to long service leave is included under the National Employment Standards (NES), but this does not exclude coverage under State and Territory Laws that deal with Long Service Leave.

“Application can be difficult to implement due to the interaction of differing state and territory laws. Further complexities arise where such an entitlement is also provided for under a pre-modernised award or enterprise agreement.

“The implementation of a uniform national long service leave standard would be a welcomed development for both employers in understanding their obligations for long service leave, and employees in understanding their entitlements. This will assist in alleviating the current uncertainty and inconsistency in this domain.”

While Australia prides itself on individual state and territory rule in many instances, as evidenced by the handling of the pandemic, sometimes common sense calls for the Federation to implement national policies that benefit both the employer and employee.

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