New Limited Number of Employment Awards

Award Modernisation is described by Fair Work Australia as the 'process of reviewing and rationalising awards to create a system of "modern awards". The aim is to have a limited number of employment awards covering entire industries across the nation. In practice the Australian Government has requested the Australian Industrial Relations Commission ("AIRC") to reduce thousands of State and Federal awards to approximately 130 modern awards.

The 'modernisation' process will be completed by the end of 2009 with modern awards having effect from 1 January 2010. Both employers and employees should become familiar with the various changes introduced by the modern awards before they apply. Business owners may face substantial financial penalties for not complying with the new provisions.

The upcoming system is intended to work hand in hand with the Statutory National Employment Standards ("NES"). Together the modern awards and NES will provide employees with guidelines for the minimum employment standards. In most cases modern awards provide for conditions beyond the NES.

The rules regarding redundancy will be altered in various industries from 1 January 2010. It is vital that business owners are aware of their changing obligations in this regard. For example, there will be new redundancy pay regulations and requirements for proving that a redundancy is genuine.

It is also important to note that modern awards will allow for increased flexibility in terms of negotiating matters such as overtime and work hours. 'Individual flexibility agreements' will permit employers and employees to vary awards to suit their individual circumstances. High income earners, that is employees earning over $100,000 (excluding superannuation), will be given the ability to form agreements to escape award coverage.

Other important changes that may affect your business include the phasing in of new minimum wages and the introduction of a general award covering employees performing award free work historically covered by another award. Enterprise Agreements will also be required to pass a 'Better Off Overall Test' ("Boot") allowing employees to be covered by their Enterprise Agreement if they are better off overall. When an Enterprise Agreement ends the employee will automatically be covered by the relevant award.

For specific advice on how award modernisation will affect your business, and how best to prepare, contact Richard Thompson or Josh Strong on (03) 9612 7306 for a free consultation.