Award modernisation changes are being made by the Australian Industrial Relations Commission (AIRC) to reduce and simplify the Federal and State Awards that currently regulate employment in Australia.
Called ‘Modern Awards’, they may include clauses that govern minimum wages, types of employment, when work is performed, overtime rates, penalty rates, annualised wages and salaries, allowances, leave and leave loadings, superannuation, and procedures for consultation, representation of parties and dispute settlement.
When do they take effect?
The new awards will come into effect in time for the commencement of the Federal Government’s new workplace relations system on 1 January 2010. The award modernisation program is taking place in four stages, based on groupings of industries and occupations.
To find out if the modern award for your industry is available and other related information, visit the Government's Fair Work website.
Employer obligations
Not all businesses are affected by award modernisation. If your business is a constitutional corporation (for example if your business name ends in Proprietary Limited or Limited) then staff who earn less than $100,000 per year will be covered by the new modern awards.
Sole traders and partnerships will not be affected as their arrangements are covered by State legislation. If your employees’ entitlements are determined under a registered Workplace Agreement or company-specific enterprise award, then the award modernisation changes also will not apply.
Australian employers covered by an award need to ensure that they are properly equipped to manage the transition to Modern Awards.
From 1 January 2010:
- Modern Awards will be used as the point of comparison for enterprise agreements, in relation to the ‘better-off overall’ test;
- Modern Award conditions will apply to employees on award-derived conditions, including individual flexibility arrangements (subject to state-based differences as identified by the AIRC);
- The rate of pay in workplace agreements must meet or exceed the base rate of pay contained and updated in Modern Awards; and
- Employees traditionally not covered by awards, and engaged under a common law contract of employment, may become covered by a Modern Award and be able to make a wage claim (this is particularly the case for lower-level management employees, especially in service industries).
Super arrangements for employers covered by an award
Depending on how long you’ve been using AustralianSuper, you may not need to take any action.
The changes primarily affect the default fund you contribute to when an employee doesn’t make a choice. If we’re named in the relevant new award for your industry or you’ve been using AustralianSuper as your default fund since 12 September 2008 or earlier, you don’t need to do anything. Your staff who will be covered by the new awards can continue to have their super with us, or nominate another fund if they choose.
You can continue to use your existing default fund if it is named in the new award, or if we’re named in the relevant new award for your industry, but AustralianSuper isn’t your default super fund, you can nominate us as the default fund for your employees’ super. But your employees also have the option of choosing their own fund.
If we are not named in the relevant new award for your industry but you had made contributions to us before 12 September 2008, you can still choose AustralianSuper as your default fund. Your employees can choose us under choice of fund regulations too.
Finally, if we are not named in the relevant new award for your industry and none of your employees have directed their contributions to AustralianSuper, then you must select a default fund from those listed in the new award. But, your employees can still choose another fund under choice of fund legislation.
If you change your default super provider after 1 January 2010 you are required to choose from one of the default funds nominated in your relevant award.
To nominate AustralianSuper as your default fund visit www.australiansuper.com/join
What does it mean for employees?
Employees of organisations covered by a new award generally don’t need to do anything. The award modernisation process aims to ensure that no employee is left worse-off under the new system, however you should contact your employer or relevant union for further information.