Make sure you are aware of the new changes to Awards.

Commission expands Award coverage – many roles are no longer award free!

In our recent article, we explained how the coverage under the Miscellaneous Award has been expanded by the Fair Work Commission (FWC).  This has meant that ER Strategies is fielding a lot of questions from clients about this change and how award coverage works.

Most modern awards are industry based (e.g. Fast Food Industry Award, Restaurant Industry Award, etc), and operate to the exclusion of other modern awards, but they may not cover employees in classifications such as a cleaner, security officer, training officer, sales development roles, etc.  The way this was applied in the past was to consider such roles as award-free in relation to the industry sector involved.

Now many of these roles will be covered under the Miscellaneous Award because of the recent change to its coverage.  However, this will not apply to all roles because the coverage of modern awards is also limited by the listed classifications of employment and the Miscellaneous Award specifically excludes many managerial and professional employees.

Award coverage explained

Under the Miscellaneous Award, the coverage clause excludes “managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.” (clause 4.2)

This exclusion is helpful because many other modern awards also do not cover managerial and professional employees, and this expresses a relatively consistent dividing line from an award coverage point of view.

However, the Miscellaneous Award classification structure includes coverage of a ‘sub-professional employee’, which unfortunately, is not defined. Employers will still therefore need to determine whether there are some employees are sub-professional employees because they will now be covered by the Miscellaneous Award.

Fair Work Act Limits

There is also s143(7) of the Fair Work Act 2009 that limits coverage of awards to employees traditionally covered by awards and provides as follows:

Employees not traditionally covered by awards etc.

(7)  A modern award must not be expressed to cover classes of employees:

 (a)  who, because of the nature or seniority of their role, have traditionally not been covered by awards (whether made under laws of the Commonwealth or the States); or

(b)  who perform work that is not of a similar nature to work that has traditionally been regulated by such awards.

Note: For example, in some industries, managerial employees have traditionally not been covered by awards.

There are some modern awards such as the General Retail Award and Fast Food Award that cover employees up to the shop manager level because it includes an employee in charge of a shop, which is different from most other awards which tend to stop at the trade or supervisory level.

The Clerks Award is also unusual in that it does cover quite senior administrative staff, but this is limited by the nature of the role having to be “wholly or principally engaged in clerical work” (clause 4.1), as opposed to managerial or professional work.

So, what do we make of all this?

This might seem pretty complicated and getting it wrong can have serious implications if it results in underpayments.  Seeking professional advice, therefore, makes a lot of sense and ER Strategies is helping its clients to make the necessary adjustments.

What needs to be done is that employers must review their award/enterprise agreements as to coverage and whether they need to make any changes to their employees’ contracts of employment, but on the other hand not overreact and make changes that are not necessary.

The reason for this is that it is common for many businesses to assume an employee with the title of ‘Manager’ as being ‘award free’ because most modern awards are limited to roles up to trade level only.

Some businesses have also treated ‘Assistant Managers’ as award free as well.  This approach has always been a bit more ‘line-ball’ because most modern awards cover employees at least up to supervisory level.

One prudent approach is to make sure your contracts of employment include an offsetting provision that allows you to absorb award and financial National Employment Standards (NES) entitlements into the salary or wage paid to your employees and not to limit them to specific purposes, such as overtime or annual leave loading.  Our ER Strategies’ template contracts for more senior roles have such a provision and are designed to help you meet any award or NES financial entitlements.

Getting Our Help 

ER Strategies can assist your business to review your situation and develop specific strategies to help ensure you remain ‘employment compliant’.  In fact, given the number of major employers who have recently discovered they have been inadvertently underpaying some sections of their workforce, we have recently developed our ‘Employment Compliance Framework’ as a model for checking client compliance on an ongoing basis.

Call us on 1300 55 66 37 for our help, or contact us to discuss how we can best help your business.

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