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The transition to Modern Awards

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The modern award system commenced operation on 1 January 2010 meaning that most employees in the national system are now covered by an industry specific modern award.

The key benefits of the modern award system are:

  • There has been a significant reduction in the number of awards that apply in Australia.
  • Subject to the transitional provisions, the differences in minimum terms and conditions of employment across states will be abolished.
  • Employees with contractually guaranteed earnings above the high income threshold (presently $108,300) are exempt from award coverage.
  • Employees covered by an enterprise agreement or a transitional agreement (registered workplace agreement) will not be covered by the modern awards. Implementing an enterprise agreement allows employers to displace the modern award and tailor the terms and conditions of employment to suit their individual needs.
  • The modern awards have been drafted in plain English and all follow a similar template which means that it is now much simpler to understand the employment terms and conditions which apply to workers.

Employers must now look to the modern awards to determine the terms and conditions that apply to their workforce. However, to deliver on the Rudd Government’s promise that employees would not be disadvantaged by the switch to the modern awards, special transitional provisions were introduced to enable certain modern award terms and conditions to be phased in over time. The key aspects of the transitional provisions are as follows:

  • The transitional provisions apply only to minimum wage rates, casual and part time loadings, penalty rates and allowances (“Rates”).
  • The transitional provisions only apply if, on 31 December 2009, an employee was covered by a state award or notional agreement preserving state award with Rates higher or lower than the modern award rates.
  • There will be no changes in Rates until 1 July 2010.
  • From 1 July 2010 until 1 July 2014 changes to Rates will be phased in by 5 equal instalments until such time as they are in parity with the modern award rates.
  • No employee’s pay can drop in the move from an old award to a modern federal award
  • Several modern awards do not contain any transitional provisions.

Presently an employee’s correct legal entitlements can only be ascertained by reconciling the applicable modern award, the applicable old award and the appropriate transitional provisions. This can be complicated making it difficult for employers to comply with their industrial relations obligations. MST can help by conducting an industrial relations compliance audit on your business. Please call one of our Workplace Relations lawyers if you would like to arrange a meeting to discuss employment conditions at your business.

Author:  Laughlin Nicholls