Award Interpretations and Classification Advices for Employers
We’ll take the stress and complexity out of dealing with the award system.
Award Interpretations and Classification Advices for Employers
We’ll take the stress and complexity out of dealing with the award system.
Employment Law Solutions for Employers
Challenges for Employers in Understanding Modern Employment Awards
While it may seem time-consuming, it’s important a business owner is fully aware of the ‘modern award’ system which applies to their enterprise’s workforce.
Modern awards came into effect on January 1, 2010, and set out the minimum terms and conditions of employment. They are industry or occupation-based and cover entitlements such as pay, hours of work, rosters, breaks, allowances, penalty rates and overtime. The award system is governed by the Fair Work Act 2009 which also sets out 10 minimum National Employment Standards (NES), that apply to ALL employees. These National Employment Standards are frequently being revised and added to and you must keep abreast of these fundamental obligations.
The importance for employers in making sure their business adheres to and properly fulfils all their obligations under the relevant awards, is because failure to comply can lead to investigation by the Fair Work Ombudsman, possible fines and susceptibility to action for unfair dismissal along with likely reputational damage.
It’s not easy. There are more than 120 modern awards in place, covering all industries and job types. Depending on the nature of your business, different employees within the one enterprise may be covered by different awards, adding to the complexity and time involved to ensure compliance. An example may be a manufacturing business, where staff in the office and staff on the factory floor are covered by different awards.
Peters Bosel Lawyers has broad experience in helping businesses to identify the correct award applicable to a position and working out the appropriate classifications and pay rates for their workforce, as well as interpreting the provisions of awards to ensure full legal compliance. We can help you take the stress and complexity out of dealing with the award system.
How do awards and enterprise agreements differ?
If your business is covered by a registered enterprise agreement (see our section on enterprise agreements), it is typically the case that modern awards do not apply to your employees. It should be noted, however, that base rates of pay in an enterprise agreement cannot be lower than those in the relevant modern award. Further, some enterprise agreements cross-reference to various award entitlements.
If an employee is not covered either by an award or a registered enterprise agreement, the National Minimum Wage and the NES prescribed in the Fair Work Act form the minimum terms and conditions of employment.
The problems of classification
Issues often arise where a worker’s award classification is in dispute, particularly where disgruntled employees are seeking to recover award entitlements and also in some unfair dismissal cases.
A salary cap called “the high income threshold” imposed by the Fair Work Commission also precludes executives on higher salary packages from making unfair dismissal claims to the Commission, often leading to a legal dispute about whether the position and duties fall under a classification in an award (or an enterprise agreement) thereby deeming them to be award covered employees.
The issue of classification when an employee has a mix of responsibilities is determined by reference to the “major and substantial employment” test. It is not merely a matter of quantifying the time spent on the various elements of work performed by a complainant; the quality of the different types of work done is also a relevant consideration.
Other things to note
Under the modern award system, business owners also need to remain vigilant about an employee’s level of experience and qualifications to determine their correct rate of pay. This is particularly the case if the employee is still completing education or qualifications while working in the business. Regular review of their pay rate to ensure it reflects their qualifications is required to ensure compliance with the award regime.
It’s also important to note that the Fair Work Commission conducts an annual wage review which can result in an increase in the minimum wages for particular job roles. If changes are made to minimum wages, generally they need to be applied from the first pay period on or after July 1 each year.
Complying with the modern award system and its array of classifications, not to mention the Fair Work Commission reviews modifying those awards from time to time, can be a confusing task for a business owner.
When the operations and overall profitability of the business are your main priority, it makes sense to engage experienced lawyers at the “front end” of establishing operations who can check your business for compliance with the award system, interpret the provisions of the awards and reduce exposure to later claims of action by employees for award entitlements. Peters Bosel Lawyers offer a thorough and comprehensive service in this area.
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Peters Bosel Lawyers offer a thorough and comprehensive service in this area so contact us today.