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Fair Work Act and its impacts

Apr 14, 2010

Background and progress –

The Fair Work Act Cth 2009 (Fair Work ACT) took effect from 1 July 2009 but actual changes to employment requirements are taking place in stages with some minor variation between states.

• Victoria referred its Industrial Relations powers to the Commonwealth in 1996 and the Fair Work Act applied from 1 July 2009 for all employers and employees.

• The ACT and NT were already under the national system so it applies to all employers and employees.

• In NSW, SA, Tasmania and Queensland, all private sector employers and employees are covered, but state and local government employees will remain under state laws.

• Western Australia has not joined the national system. Some employers (essentially incorporated entities) and their employees are covered by the national system, but sole traders, partnerships, other unincorporated entities and non-trading corporations and their employees will continue to operate under the WA state system (though some of these may be covered by transitional awards until 27 March 2011).

Safety Net for all employment

From 1 January 2010, there are new minimum standards for employment laid out in the National Employment Standards (NES) as a safety net for all eligible employees – the NES do not apply to volunteers, those in management work or on higher incomes (base salary over $108,000) or to independent contractors, who are covered by the Independent Contractors Act (Cth). Note that sham contracting (employing people as contractors when their conditions really equate to being employees) is now an offence under the Fair Work Act with heavy fines attached. (More information can be found at www.fairwork.gov.au or www.ato.gov.au )

The NES includes hours of work, annual leave, personal, carers and compassionate leave, flexible work for parents, community service leave, public holidays, Information in the Workplace, Notice of Termination and Redundancy and long service leave. Employees now have the right to request flexible working arrangements and extended parental leave. Employers must respond in writing and refuse only on reasonable grounds.

Modern Awards

In certain occupations and industries, there are extra minimum entitlements laid down. Close to 1600 state and federal awards will be replaced by 122 Modern Awards, so those looking to transition will have to read the occupation descriptions to decide which one to transition to. The Modern Awards can be accessed at http://www.airc.gov.au/awardmod/fullbench/awards.htm

The Modern Awards will be phased in from 1 July 2010 until 1 July 2014 including rates of pay, loadings and penalty rates. In general, where the Modern Award is higher, an employee on base rates would receive the pre-Modern Award plus 20% of the difference and phase upwards each year. Where the Modern Award is lower, a new employee starting on the base rate would receive the pre-Modern Award plus 20% of the difference. Many employers, however, pay above the base rate and under the Fair Work Act, no employee should be worse off.

Key actions for employers

• Update all workplace policies and contracts so that they reflect NES

• Check the coverage and requirements of the NES and applicable Modern Awards

• If employees are covered by a Modern Award, they must be advised of their Award classification

• Inform employees covered by an Award of their annualised salary and what hours it covers  and whether overtime applies or not. (There may huge fines of $33,000 per breach for underpayment of overtime etc if this is not made clear – depends on the Award.)

• Make available copies of the Modern  Award and NES.

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