Employers Gear Up For Modern Award Changes From 1 March 2020

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From March 1st, Australia is set to witness some changes pertaining to modern awards. These legal documents summarising the minimum pay rates and conditions of employment is subjected to periodic reviews to keep them relevant.

Having more than 100 industry or occupation awards mean that most of the workforce in the country would come under the purview of at least one of these awards. It is important for an employer to understand clearly which award covers them. It is quite possible that an employer is covered by more than one award depending on the jobs undertaken by their employees.

The Full Bench of Fair Work Commission has decided to introduce some new annualised salary clauses into a number of modern awards, effective from 1 March 2020. These changes are being brought in with an aim to reduce wage theft and non-compliance. Consequently, some new HR and payroll practices can be expected across industries.

What should be done?

The first thing is to check the copies of the tranche 1 awards on the Commission’s Modern Award list to find out what the changes are. That done, find out which award/awards are applicable to you.

As an employer or manager, you are required to make a copy of the award, make them available to your staff on a noticeboard (traditional or digital). If more than one award applies to your employees, you’ll have to make copies of all of them and make them available to staff. If you already have an award displayed on your notice board, make sure it is updated to reflect the requirements of the new award.

Managers/employers must ensure compliance through a review of employment contracts and updated HR and payroll practices. They’ll have new obligations such as auditing annual salaries, and recording hours of work. Consequently, they’ll have to back pay any shortfall when the annual salaries are audited in accordance with the modern award entitlements.

What’s changing?

In most cases, the biggest changes include layout and language. The idea is to make the award simpler and easier to understand. The rules and entitlements in your award are unlikely to have changed drastically.

As the Commission has made periodic changes to awards over the last few years, this has been an ongoing process. As a result, most employers would have already updated their websites and other relevant tools. In all likeliness, most of the big changes would have already been reflected in your current award.

The model clauses will place mandatory requirements on employers that pay annual wages to their employees. This will be in accordance with the specific modern award entitlements applicable to the relevant modern awards.

Employers might have to implement new payroll and HR practices to ensure employees are adequately compensated at all times through annual wages, thanks to the new clauses.

Why have the changes been introduced?

Employers are used to paying a total annual remuneration to employees with the specific intention of setting-off and absorbing all modern award monetary entitlements. This includes a wide variety of payments such as minimum wages, overtime rates, penalty rates and loadings that are separately payable under an award.

However, only some employers undertake annual audits of yearly wages to ensure the overall remuneration make up for each individual award entitlement that is rightly due to an employee.

With the new award obligations, it is aimed to ensure that the employees covered under awards are suitably compensated for the work they perform. This is through ensuring an adequate calculation of annual remuneration received. The audit helps to capture the whole range of monetary benefits that come under the purview of modern awards for the specific work performed.

When is my award changing?

The first set of awards applies from the first full pay period on or after 4 February 2020. The Commission will release the remaining awards once they’re finalised.

Who do awards cover?

Awards are applicable to employers and employees on the basis of the industry they work in as well as the type of job they perform. Every award has information regarding the people who would come under its scope. If you are not sure which award applies to whom, you can refer to:

·       clause 4 - the coverage clause 

·       pay clause or schedule – for job classifications  

Modern awards impose new annual wage obligations

·       Banking, Finance and Insurance Award [MA000019]

·       Broadcasting, Recorded Entertainment and Cinemas Award [MA000091]

·       Health Professionals and Support Services Award [MA000027]

·       Clerks - Private Sector Award [MA000002]

·       Horticulture Award [MA000028]

·       Hydrocarbons Industry (Upstream) Award [MA000062]

·       Hospitality Industry (General) Award [MA000009]

·       Legal Services Award [MA000116]

·       Local Government Industry Award [MA000112]

·       Marine Towage Award [MA000050]

·       Manufacturing and Associated Industries and Occupations Award [MA000010]

·       Mining Industry Award [MA000011]

·       Oil Refining and Manufacturing Award [MA000072]

·       Pastoral Award [MA000035]

·       Pharmacy Industry Award [MA000012]

·       Rail Industry Award [MA000015]

·       Restaurant Industry Award [MA000119]

·       Salt Industry Award [MA000107]

·       Telecommunications Services Award [MA000041]

·       Water Industry Award [MA000113]

·       Wool Storage, Sampling and Testing Award [MA000044]

Almost all employers hire clerical and administrative employees. As the Clerks - Private Sector Award 2010 is also among the awards affected, such employers may have to seek legal counsel to ensure award compliance.

Merging of the Quarrying Award and the Cement and Lime Award

All of the Quarrying Award’s terms and conditions are moving into the Cement and Lime Award and will now be called the Cement, Lime and Quarrying Award [MA000055]. This is effective from 4 February 2020.

How to comply?

The first step would be to understand which modern awards apply to your workplace. This would include the new changes. Furthermore, a review of whether the employees are correctly paid for the work they perform currently should also be undertaken.

Secondly, any gap in compliance should be closed through amendments to employment contracts and adjustments to HR and payroll practices.

Failure to comply

Compliance is mandatory. It should be noted that starting 1 March 2020, any failure to comply would be considered a breach of a modern award. Consequently, this will attract civil penalties under the Fair Work Act 2009.

Get In Touch

If you would like to learn more about HR for your business contact us for a no obligations phone call with Iolanda Hazell, Director, Infinity HR, at info@infinityhr.com.au

About The Author

Iolanda Hazell is Director & Founder of Infinity HR, helping businesses create a people-first workplace culture. With over 18 years HR expertise, Iolanda works with small to large organisations to create tailored people strategies that achieve business goals."

 
Sources

[1] ref: https://www.fairwork.gov.au/awards-and-agreements/awards/list-of-awards

Disclaimer

The information provided on our blog is designed to provide helpful information, and does not constitute legal advice, and not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you or your organisation may have.