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FAQs: Fair Work System
Some frequently asked questions: What do I have to do differently from 1 January? Which Modern Award/s cover my business? How do I move from the old to Modern Awards? Is my business covered by the Fair Work Act? What is happening to sole traders, partnerships and others who have not been in the national system? What state legislation still applies to my business? Are high income employees covered by the Fair Work Act and Modern Awards? What are the National Employment Standards (NES) and how do they work? How will differences between Modern Awards and pre-Modern Awards be adjusted in the future? What are transitional arrangements? Is there any flexibility for me to come to my own arrangements with staff under the awards? Who can lodge an unfair dismissal claim? What do I do if my business is faced with an unfair dismissal claim? What do I have to do differently from 1 January? From 1 January 2010, there are several important changes that affect all employers and employees in the national workplace relations system. These changes include: - commencement of Modern Awards,
- private sector employers who had remained in state systems moving into the national system in New South Wales, Queensland, Tasmania and South Australia, and
- the introduction of new National Employment Standards (NES),
- the Fair Work Information Statement to be given to new employees
You need to be prepared for these changes. Modern Awards From 1 January 2010, Modern Awards replace existing federal system awards and NAPSAs (Notional Agreements Preserving a State Award). Modern Awards are industry or occupation-based enforceable minimum employment standards. Modern Awards cover employees who perform work in those industries or occupations covered by a particular Modern Award. However, Modern Awards may not apply to some managers or higher income employees (who have an appropriate guarantee of annual earnings of more than $108,300), even if a Modern Award covers the industry in which they work. For conditions that apply to high income employees see FAQ below. Modern Awards contain terms and conditions about: - minimum wages
- overtime and penalty rates
- types of employment
- work arrangements (eg rosters, variation to working hours)
- hours of work
- rest breaks
- classifications
- allowances
- leave and leave loadings
- superannuation
- procedures for consultation, representation and dispute settlement.
Some Modern Awards also contain terms about redundancy. National Employment Standards (NES) The NES are minimum provisions that apply to all ‘national system employers’ from 1 January 2010. The NES may be bettered by provisions in Modern Awards. The NES should be read in conjunction with the applicable Modern Award. Click here to view a full list of the 10 NES Fair Work Information Statement From 1 January 2010, all employers covered by the national workplace relations system have an obligation to give each new employee a Fair Work Information Statement before, or as soon as possible after, the employee starts employment. Back to top Which Modern Award or awards cover my business? One of the main objectives of award modernisation has been to simplify and reduce the complexity of the workplace relations system. Part of this process has been reducing the number of awards through consolidation. To see which awards cover your industry – refer to the list of Modern Awards at Fair Work Australia. It is recommended that you obtain advice with regard to the Modern Awards that cover your business. NSW Business Chamber members with Workplace Advice Line entitlements can call 13 29 59. For general enquiries, or to become a NSW Business Chamber member, call 13 26 96. Back to top How do I move from the old to Modern Awards? Most Modern Awards have ‘transitional’ arrangements for moving from old to Modern Awards. These transitional arrangements deal with important issues such as minimum wages, loadings and penalty rates. The transitional arrangements are discussed in more detail in the FAQ below. Back to top Is my business covered by the Fair Work Act? In all States and Territories, except Western Australia, the Fair Work Act covers all private sector employers and their employees. The National Employment Standards (NES) apply to all private sector businesses from 1 January 2010. NSW Business Chamber members with Workplace Advice Line entitlements can call 13 29 59 with any questions relating to the Fair Work system. For general business enquiries, or to become a NSW Business Chamber member, call 13 26 96. Back to top What is happening to sole traders, partnerships and others who have not been in the national system? From 1 January 2010, sole traders, partnerships, other unincorporated entities and non-trading corporations in New South Wales, Queensland, South Australia and Tasmania are covered by the national system. Employers that were already operating under the national system continue to be covered (eg Pty Ltd businesses, employers in the ACT, NT and Victoria). There are special arrangements for employers in New South Wales, Queensland, South Australia and Tasmania who are joining the federal workplace relations system from 1 January 2010 to help them transition to the national system, including: - State awards that covered employers and employees moving into the national system from 1 January 2010 continue to apply and are known as Division 2B State awards. These awards will automatically terminate on 31 December 2010 (except for state enterprise awards). Employers and employees will then be covered by a relevant Modern Award.
- State Employment Agreements that covered employers and employees moving into the national system from 1 January 2010 continue to operate until terminated or replaced and are known as Division 2B State employment agreements.
Note: Former state system employees must receive at least the minimum entitlements in the NES so where the NES is better than the corresponding condition in the state award or agreement, the NES applies, and wage rates can’t fall below the relevant state or modern award. Back to top What state legislation still applies to my business? Some State legislation still applies to business including: - anti-discrimination
- superannuation
- workers compensation
- occupational health and safety
- matters relating to outworkers
- child labour
- training arrangements, except conditions governed by the NES and modern awards
- long service leave
- leave for victims of crime
- attendance for service on a jury, or emergency service duties where it is more beneficial
- declaration, prescription or substitution of public holidays
- workplace surveillance
- business trading hours
- claims for enforcement of contracts of employment
- directions to perform, or not perform, work relating to provision of essential services
- situations of emergency.
Back to top Are high income employees covered by the Fair Work Act and Modern Awards? An employee is deemed to be a ‘high income employee’ when earning over $108,300 pa including wages and the value of non-monetary benefits (indexed from 1 July each year) and can be excluded from Modern Awards under certain circumstances. Amounts which cannot be determined in advance, such as overtime that is not guaranteed, bonuses, reimbursements or statutory superannuation contributions, are not included in the threshold. Exclusion is not automatic and employers need to guarantee earnings in writing in advance, not subject the employee to undue pressure and advise the employee in writing that a modern award will not apply. Note: high income earners are still covered by the National Employment Standards (NES) Back to top What are the National Employment Standards and how do they work? The National Employment Standards (NES) are made up of 9 minimum employment conditions plus the Fair Work Information Statement. Some aspects of the NES are comparable to the minimum standards under the previous legislation (eg annual leave). However, the NES expand the range of employer obligations, including redundancy pay, changed parental leave, and the right of working parents to request flexible working arrangements. The NES are minimum provisions that apply to all ‘national system employees’ from 1 January 2010. The NES may be bettered by provisions in Modern Awards. The NES should be read in conjunction with the applicable Modern Award. The minimum entitlements under the NES are: 1. Hours of work — The ordinary weekly hours which a full-time employee can be required to work is 38 hours. Employers can request that employees work additional hours provided they are 'reasonable'. Modern Awards and Enterprise Agreements may also include terms regarding averaging hours of work over a specified period. An employer and an award/agreement-free employee also may agree in writing to averaging hours of work over a maximum period of 26 weeks. 2. Requests for flexible working arrangements — an employee who has responsibility for a child under school age or a person with a disability who is less than 18 years of age may request in writing a change in working arrangements to assist the employee meet their caring responsibilities. This entitlement only applies to an employee with at least 12 months continuous service with the employer. In the case of casual employees, this entitlement applies to longer term casual employees with periods of employment over a periods of at least 12 months who have a reasonable expectation of continued employment with the employer. An employer is entitled to refuse an employee’s request for flexible working arrangements on reasonable business grounds but must provide written reasons for such a refusal within 21 days of the request. 3. Parental leave — an employee is entitled to 12 months unpaid parental leave, ie maternity, paternity or adoption leave, provided the employee has completed at least 12 months continuous service with the employer. An employee may also extend the leave period by an additional 12 months unpaid parental leave (total of 24 months) under certain circumstances. Such extension may only be refused on reasonable business grounds. Parental leave entitlements may also exist for the employee’s partner. 4. Annual leave — a permanent employee (full-time or part-time) is entitled to 4 weeks paid annual leave for each completed year of service with the employer. Continuous shift workers (as defined in the relevant Modern Award) are entitled to 5 weeks annual leave each year (pro rata for an incomplete year). A part-time employee is entitled to a proportionate amount of leave based on their ordinary hours, while there is no entitlement to annual leave for casual employees. Annual leave accrues continuously and accumulates if it is not taken. An employee does not have to wait 12 months before being able to take any accrued annual leave. Cashing out annual leave — the applicable Modern Award or enterprise agreement may contain a term that allows cashing out of annual leave but, if there is no award/agreement provision, cashing out is not permissible. Any cashing out provisions in a pre-Fair Work agreement continue subject to the provisions of the NES. The NES allows an ‘award/agreement-free’ employee to enter into an agreement to cash out a portion of their annual leave. When cashing out occurs the employee will need to have at least 4 weeks annual leave remaining after the cashing out of leave has occurred. An employee is to be paid at their ‘base rate of pay’ for the period of annual leave, but Modern Awards often provide for ‘ordinary pay’ and the award provision would prevail. 5. Personal/carer’s leave and compassionate leave — employees other than casuals are entitled to 10 days paid personal/carer’s leave for each year of continuous service with the employer and up to 2 days paid compassionate leave for each occasion where a member of an employee’s immediate family or household dies or has an illness or injury that poses a serious threat to his or her life. Entitlements are calculated on a pro-rata basis for part time employees. Casuals can take up to two days unpaid compassionate leave. Personal leave, which can be taken as sick leave or carer's leave, accrues on the basis of the employee’s ordinary hours of work and can be taken at any time subject to the employee providing reasonable evidence to the employer, on the employer’s request. Where there is no accrued personal/carers leave employees have an entitlement to take two days unpaid carer’s leave when a member of an employee’s family or household (as specified in the legislation) requires care or support because of illness, injury or unexpected emergency. Casual employees are entitled to up to two days unpaid leave per occasion. 6. Community service leave (including jury service) — an employee is entitled to take unpaid leave to engage in designated community service activities, such as a voluntary emergency management activity. In addition, employees, other than casuals, who take leave to provide jury service are entitled to be paid at their normal rate for a period of up to 10 days. The employer can require the employee to provide evidence the employee has taken all reasonable steps to obtain jury service pay, and may reduce the employers’ payment to the employee by that amount. 7. Public holidays — an employee is entitled to a paid day off when a designated public holiday falls on a day the employee is ordinarily required to work. An employee can reasonably refuse to work on a public holiday. Penalty rates for work on a public holiday are determined by the applicable modern award or agreement. The prescribed public holidays under the NES are: 1 January (New Year’s Day), 26 January (Australia Day), Good Friday, Easter Monday, Anzac Day, the Queen’s Birthday holiday (as determined by the relevant state or territory government), 25 December (Christmas Day), and 26 December (Boxing Day), plus any other day or part-day proclaimed as a holiday by a state or territory government for the state or territory or a region. When a public holiday is substituted it is the substitute day which applies. 8. Termination of employment — Notice of termination — the employer must give a minimum period of notice of termination, based on the employee’s period of continuous service with the employer. The maximum period of notice is 5 weeks for employees who have completed 5 years service or more and who are aged over 45 years. The employer is also required to advise the employee in writing, of the date of termination no later than the date of termination. The requirement to provide written advice of the termination date applies whether or not notice is worked or paid out. This requirement does not apply to casuals, summary dismissal or term contracts. 9. Long service leave — in most cases, long service leave will continue to be provided by the relevant state or territory long service leave legislation. This is a transitional arrangement until a national long service leave standard is developed. State or territory law does not apply to an employee whose entitlement to long service leave comes from an award or agreement which is continuing under transitional arrangements. Fair Work Information Statement Employers are required to issue a Fair Work Information Statement to all new employees before or as soon as practicable after the employee commences employment. The Statement includes information about the NES, modern awards and agreement-making under the Fair Work Act and is published by Fair Work Australia. The Statement does not need to be provided to employees who commenced work prior to 1 January 2010 or more than once a year to casual employees. Back to top How will differences between Modern Awards and pre-Modern Awards be adjusted in the future? Differences in wage rates and some other conditions under most Modern Awards are to be phased-in over five years, commencing from the first pay period on or after 1 July 2010. The effect will be that, where ‘transitional provisions’ are included in a Modern Award, the pre-Modern Award conditions relating to minimum wages, loadings, penalties and shift allowances will continue to apply until 1 July 2010. after this date changes will occur as provided for by the relevant transitional provisions. Refer to the provisions under your modern award. NSW Business Chamber members can access additional support to help them understand their obligations under the new Fair Work system. Members can call the Workplace Advice Line on 13 26 96. This service is available to members only. Call 23 26 96 for more information about becoming a NSW Business Chamber member. Back to top What are transitional arrangements? Modern Awards may contain transitional provisions which allow differences in current minimum rates of pay and other differences to be progressively phased in. NSW Business Chamber members can access additional support to assist in understanding their obligations under the new Fair Work system. Members can call the Workplace Advice Line on 13 26 96. This service is available to members only. Call 23 26 96 for more information about becoming a NSW Business Chamber member. Back to top Is there any flexibility for me to come to my own arrangements with staff under the awards? All Modern Awards have flexibility clauses which allow negotiation between employer and employee on some award provisions. Check your Modern Award. If you need assistance, NSW Business Chamber Members can call the Workplace Advice Line on 13 29 59. For more information about becoming a NSW Business Chamber member, call 13 26 96. Back to top Who can lodge an unfair dismissal claim? Not all employees are eligible to make a claim for unfair dismissal. An employee must have completed a minimum employment period of employment of at least 6 months with the employer (where the employer employs 15 or more employees), OR 12 months (where the employer employs fewer than 15 employees). Until 1 January 2011, the number of employees is based on the number of full time equivalent employees, thereafter it will be on headcount. Other categories of employee excluded from accessing the unfair dismissal laws include: - an employee not covered by a modern award or agreement whose annual rate of earnings exceeds the ‘high income threshold’ (currently $108,300 pa);
- an employee employed for a fixed term, specified task or specified season;
- an employee subject to a registered training agreement and whose employment in limited to the duration of that agreement and who is terminated at the end of the training period; and
- an employee dismissed in cases of genuine redundancy.
Back to top What do I do if my business is faced with an unfair dismissal claim? It is good practice to keep records of counselling, warnings and termination interviews. Remember, in most cases you will need to have provided written notice of termination. Obtain advice in regard to your obligations — NSW Business Chamber members can call the Workplace Advice Line on 13 29 59. Call 13 26 96 if you would like more information on becoming a member. Review and respond to the papers from Fair Work Australia. Go to the Fair Work Australia web site and review the unfair dismissals guide Determine your position – either to settle or proceed to remediation. You may need to seek specialist advice on this matter. NSW Business Chamber members can call the Workplace Advice Line on 13 29 59 for assistance. Call 13 26 96 if you would like more information on becoming a member. Prepare for Conciliation — with advice from specialists such as NSW Business Chamber, or using the Fair Dismissal Code guidelines and checklist. NSW Business Chamber members can call the Workplace Advice Line on 13 29 59 for assistance. Call 13 26 96 if you would like more information on becoming a member. Additional helpful links Fair Work Australia Fair Work Ombudsman Membership information Back to top
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