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Productivity / Growth

Employee awards: What you need to know

If you employ staff or plan to, you'll need to know which award your employees are covered under. Does it matter? Yes it does, and more than you think. Here’s how to protect your business.

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In Australia we previously had over 1700 employee awards in use. How confusing! It has now been simplified into 122 Modern Awards which became effective on 1 January 2010. Most of these awards have transitional provisions over a five year period to phase in changes in wages, loadings and penalties.

Features of the national industrial relations system

Employers and employees in the national system have the same workplace rights and obligations, regardless of the state they work in. Features of the national industrial relations system include:

  • A set of 10 minimum National Employment Standards (NES).
  • Modern Awards that apply nationally for specific industries and occupations.
  • A national minimum wage order (where it applies).
  • Enterprise bargaining.
  • Protection from unfair dismissal.

Why you need to know about the Modern Awards

In the “good ole days” if you paid above the award then none of the other requirements of the award were applicable to you. This is no longer the case. Regardless of paying above the award, all the other conditions of the Modern Award must be met, otherwise you are in breach of the award; and breaches attract civil penalties.

"Regardless of paying above the award, all the other conditions of the Modern Award must be met, otherwise you are in breach of the award. "

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What is covered in an Award?

  • Base rates of pay.
  • Types of employment (e.g. full-time, part-time, casual).
  • Overtime and penalty rates.
  • Work arrangements (e.g. rosters, variations to working hours).
  • Annualised wage or salary arrangements.
  • Allowances (e.g. travel allowances).
  • Leave, leave loading and taking leave.
  • Superannuation.
  • Procedures for consultation, representation and dispute settlement.

What you need to do to protect your business

  1. Identify what award covers your workplace. Check whether the terms and conditions of employment have changed.
  2. Review and update employment contracts and/or policies to reflect the changes to terms and conditions.
  3. Consider appropriate award classification levels – minimum wages, allowances, penalties and loadings.
  4. Ensure compliance with non-monetary provisions of the award, for example, consultation about workplace change or dispute resolution provisions.
  5. Consider options to exempt high income award covered employees, for example, guarantee their annual earnings.
  6. Consider how to transition existing employees to new rates of pay.

The Ombudsman, so far, is taking a fairly relaxed approach to the transition (and subsequent breaches), mainly ensuring that you move employees across.  However, if you continue to breach, the full impact of legislation will hit, and this includes fines.

Once you have your head around your obligations you’ll be in a better position to ensure your micro-business stands up to scrutiny.

What are your experiences with employee awards?

Natasha Hawker

helps SMEs understand the challenges their businesses face and unlocks the mysteries of effective HR. She is the co-owner of Employee Matters and author of From Hire to Fire: Everything in Between".

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