*Based on the general Transitional Provisions applying to most modern awards. For advice regarding your specific award, please contact Livingstones Australia.
Will each term and condition of the modern award be phased in?
No. The Commission decided to take the approach that there would be a limited number of terms and conditions that would be subject to transitional provisions to limit the regulatory burden and minimize complexity. They include:
- minimum wages
- casual and part-time loadings
- Saturday, Sunday, public holiday, evening and other penalties
- shift allowances.
What happens if the modern award rate is more than what the current award is now?
If the modern award rates are more than the current award rate, the transitional provisions apply such that increases will be phased in.
What happens if the modern award rate of pay is less than what the current award is now?
If the modern award rates are less than the current award, the transitional provisions apply such that reductions will be phased in. This mainly applies to new employees.
However, if an employee will receive a reduction in take-home pay as a result of the modern award, or the transitional arrangements, they can apply to Fair Work Australia for orders preventing or stopping this.
Therefore, employers will be obliged to compare their current wages and salaries and make sure that no employee will receive a reduction in take-home pay.
I have an agreement, does this affect me?
The new legislation requires all agreements, (whether made before or after 1 July 2009) to meet or exceed the base rate of pay of the modern award, throughout the life of the agreement.
How long will the transitional phase last?
The transitional provisions apply for 5 years. There are 5 instalments of phasing-in arrangements, and they apply each 1 July until 2014.
For example, if the current award wage rate is $10.00/hour, but the modern award equivalent is $15.00/hour, in the first year, the employer will be required to pay $11.00, after the second instalment, $12.00 and so on until the fifth instalment.
When do the transitional provisions commence?
The phasing-in provisions will commence from 1 July 2010 and conclude on 1 July 2014, in line with each Fair Work Australia minimum wage review.
Do the transitional provisions apply to all employers?
Generally Yes. The transitional provisions apply to all employers who are covered by the modern award which allows for transitioning. The award also allows employers who would have been covered by the modern award but for an agreement and employers who are entering the industry after 1 January 2010 to transition.
How do the transitional provisions interact with the minimum wage reviews?
The transitional provisions relate only to the differential amount between the existing award wages and the modern award minimum wages.
The modern award minimum wages will be increased annually on 1 July, and if the employer is phasing in wage increases, the employer must also apply any increase resulting from the wage review. However, if the employer is phasing in wage reductions, the amount is to be set off against the transitional differential amount.
If the 2010 wage review from Fair Work Australia completely takes away the differential amount, then no transitional provisions will apply.
Do I have to comply with the transitional arrangements, or can I just apply the modern award?
You do not have to follow the transitional arrangements. You can simply adopt the modern award conditions as of 1 January 2010. However, if the modern award is less beneficial than the current award, employees may apply for take home pay reduction orders.
Do I have to increase my employees’ overaward amounts?
If you are paying employees more than what is required under the existing award or current award, you can continue to pay the same amount, so long as it is above the modern award rate.
There is no requirement for employers to increase an employee’s wage or salary, if it is an above award amount.
Is there anything else I need to know?
The transitional arrangements also make reference to industry allowances, which will be incorporated into the phasing-in calculations. These will be dealt with on an industry-by-industry basis, in accordance with the relevant modern award.
Indeed, there may be specific industry issues which are also identified by Fair Work Australia in their decision. Please check with your Livingstones consultant if your industry is affected by any specific issues.
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