Basics of the new Modern Awards

Employers must come to grips with Modern Awards

Opinion: Heather Ridout, chief executive of the Australian Industry Group.
January 6, 2010

THIS week sees the start of a new chapter in Australia’s long history of workplace regulation with the coming into force of the raft of new industrial awards and the National Employment Standards.

Together with the new workplace laws that have operated since July 1 last year, including new bargaining, unfair dismissal and general protections laws, these changes will mean a sizeable new compliance challenge for many businesses. As such it’s worth reflecting on their introduction.

The consolidation of such evocative awards as the Brush and Broom Making Award and the Saddlery, Leather, Canvas and Plastic Material Workers’ Award into the Manufacturing and Associated Industries and Occupations Award may provide an occasion for a pause to indulge in a moments’ nostalgia. But few employers will lament the passing of the old complex system.

The so-called modern awards, which represent the streamlining of thousands of federal and state awards into a new set of 122 national awards, are much broader than existing industry awards and apply to all employers and employees in the industry described in the award.

For employers, there will be fewer awards to comply with, reducing the regulatory burden. However, some employers will experience cost increases, given that a single set of award conditions has been determined for each industry to replace the diverse conditions in the many existing federal and state awards.

With these benefits and risks in mind, and considering the importance of getting it right for our member companies and industry generally, the Australian Industry Group was the most active industry association involved in the award modernisation process.

While it was a tough process, it was characterised by a generally practical approach by the Australian Industrial Relations Commission. The commission deserves credit for achieving what looked like an impossible task at the start.

In some industries, much was agreed between employers and unions and submitted to the commission as a joint position. This occurred in manufacturing and in the information and communication technology industry, where Ai Group, in consultation with employers in these industries, reached agreement with the unions on most of the content of the modern awards.

In other cases, the process has been much more problematic and the subject of inaccurate union claims. The aviation industry is a case in point, where the Australian Services Union made wild claims but failed to provide any evidence of any employees who would have their pay reduced.

There has been some confusion as to the start date for modern awards. They began operating on January 1. It is only some specified award provisions that do not operate until July 1, namely minimum wages, loadings and penalties, and only if the relevant old award provisions are higher or lower than the modern award provisions, and only if the award contains the commission’s model transitional provisions (most do).

In a year in which there has been so much change in the workplace relations area, many businesses will be apprehensive about the new awards and perhaps are only just starting to think about them.
Those employers who are not yet up to speed in understanding the new minimum entitlements need to move quickly.

Modern awards, in conjunction with the National Employment Standards, deal with day-to-day employment issues such as minimum pay rates, hours of work and leave entitlements. Employers need to ensure they comply with the new safety net.

There is a great deal of assistance available to employers from industry associations such as Ai Group, and from government sources. Thousands of employers have attended briefing sessions and training courses conducted by Ai Group, but it is clear many thousands have not yet focused on this issue.

While the Fair Work Act contains tough penalties for non-compliance with modern awards and workplace laws, the Office of the Fair Work Ombudsman needs to take an educative, rather than heavy-handed, approach in ensuring compliance, particularly during the early stages.

Award modernisation has been a big and extremely complicated task but we now have a much simpler award system and the vast amount of time and effort devoted to the modernisation exercise has been worthwhile.

If problems become apparent in the modern awards, Fair Work Australia needs to address the problems without delay. Australia needs to maintain a flexible and productive system of workplace entitlements. The benefit of such flexibility was very evident during the recent economic downturn, with higher employment levels achieved in Australia than in other developed nations.