In accordance with a decision from the Australian Industrial Relations Commission, the following Awards contain a schedule that allows for a phasing-in of some of the Award conditions;
· Road Transport & Distribution Award 2010
· Clerks, Private Sector Award 2010 and/or
· Manufacturing and Associated Industries Award 2010 (for Trades/Mechanical staff)
· Note: The Road Transport (Long Distance Operations) Award 2010 does not contain Transitional provisions.
· The following provisions of the Modern Awards can generally be phased in over a period up to five (5) years (refer to Frequently Asked Questions on page 4):
i. minimum wages, including wages for junior employees, employees to whom training arrangements apply and employees with a disability, industry allowances
ii. Casual (and part-time) loadings
iii. Saturday, Sunday, public holiday, evening and other penalties
iv. Shift allowances
• Other Award conditions will take effect on 1st January 2010 e.g. spread of hours, overtime rates, allowances etc
• Increases that flow to employees under a Modern Award can be absorbed into existing over-award payments.
Phasing In Details
• The phase-in will commence on 1st July 2010, continuing in annual increments of 20% until 1st July 2014.
• The phasing-in will take place in up to five instalments so that cost increases and pay reductions all occur in lots e.g. a $10 per week wage increase from current award/Pay Scale rates will occur in $2 instalments over the five year period.
• If the old rate is lower, the applicable rate for both existing and new employees will remain at the old rate until 1st July 2010, and then will increase by 20% of the transitional amount each year, and
• If the pre 1st January 2010 rate is higher than the Modern Award Rate, the applicable rate for existing employees at 1st January 2010 will remain at that old rate until the new rate catches up through award increases. (The AIRC decision makes provision for the no reduction in take-home pay principle);
• If the pre 1st January 2010 rate is higher, the applicable rate for employees hired after 1st January 2010 but before 1st July 2010, will remain at that rate until the new rate catches up through award increases (The AIRC decision makes provision for the no reduction in take-home pay principle);
• If the pre 1st January 2010 rate is higher for employees hired after 1st July 2010 the applicable rate is the adjusted rate as per the Transitional Provisions prescribed in the Award.
• If the pre 1st January 2010 rate is lower, the applicable rate for both existing and new employees will remain at that old rate until 1st July 2010, and then will increase by 20% of the transitional amount each year as prescribed in the Transitional Provisions of the Award.
FREQUENTLY ASKED QUESTIONS
Do I have to comply with the transitional arrangements, or can I just apply the modern award?
You do not have to follow the transitional arrangements. You can simply adopt the modern award conditions as of 1 January 2010. However, if the modern award is less beneficial than the current award, employees may apply for take home pay reduction orders.
What about future annual wage increases to Modern Awards?
The employer must apply any increase in minimum wages in the Modern Awards resulting from an annual wage review. The revised Modern Award rate would then still be subjected to the above phasing in process.
What if I make over award payments to my employees?
The AIRC has decided that the monetary obligations imposed on employers by Modern Awards may be absorbed into overaward payments. Nothing in the Modern Awards requires employers to maintain or increase any overaward payment.
Is Employee take-home pay protected?
Separate from the transitional provisions, employees can also apply to Fair Work Australia for Take Home Pay Orders if the move to a modern award means they suffer a reduction in their take home pay.
There is no equivalent right for employers to apply to Fair Work Australia.
How does this affect workplace agreements?
If a business is covered by a workplace agreement, modern awards will not affect an employee’s rights and entitlements.
However, if an employee is paid less than the minimum wage under the corresponding modern award, the pay rate must be raised at least to the modern award amount.
Where no relevant modern award exists, pay rates need to be, at minimum, in line with the Federal minimum wage.
Examples
Where the pre-modern Award rate of pay for an employee ($X) is less than the Modern Award rate of pay ($Y). The difference $Y-$X is referred to as the “transitional amount”
From the following dates the employer must pay no less than the minimum wage for the classification in the Modern Award minus the specified proportion of the transitional amount:
First full pay period on or after
1 July 2010 80%
1 July 2011 60%
1 July 2012 40%
1 July 2013 20%
E.g. If you were paying $10 per hour under your current NAPSA/State Award and the Modern Award provided for $15 hour
10 – 15 = 5
Transitional Amount = 5
5*80% = 4
15-4 = 11
$11 per hour is the new rate for the first year
Weekly Salary Transition (existing Salary greater than Modern Award)
Where the pre-modern Award rate of pay for an employee ($X) is greater than the Modern Award rate of pay ($Y). The difference $X-$Y is referred to as the “transitional amount”. From the following dates the employer must pay no less than the minimum wage for the classification in the Modern Award plus the specified proportion of the transitional amount:
E.g. If you were paying $15 per hour under your current NAPSA/State Award and the Modern Award provided for $10 hour
15 - 10 = 5
10+4 = 14
$14 per hour is the new rate for the first year
* NB the Employee could seek a Take Home Pay order to address the reduction that was not insignificant
Casual Loading Transition
Where the pre-modern Award Casual loading for an employee (X%) is less than the Modern Award loading (Y%). The difference (Y%-X%) is referred to as the “transitional amount”. From the following dates the employer must pay no less than the minimum wage for the classification in the Modern Award minus the specified proportion of the transitional amount:
E.g. If you were paying 20% casual loading under your current NAPSA/State Award and the Modern Award provided for 25% casual loading
25 – 20 = 5
25-4 = 21
21% is the new casual loading for the first year
Penalty Rate Transition (other than Overtime)
Where the pre-modern Award penalty rates (weekend, shift, public holidays) for an employee (X%) is less than the Modern Award penalty (Y%). The difference (Y%-X%) is referred to as the “transitional amount”. From the following dates the employer must pay no less than the penalty for the classification in the Modern Award minus the specified proportion of the transitional amount:
E.g. If you were paying 200% penalty (ie double time) under your current NAPSA/State Award and the Modern Award provided for 250% penalty (ie double time and one half)
250 – 200 = 50
Transitional Amount = 50
50*80% = 40
250-40 = 210
210% is the new penalty for the first year