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Transitional arrangements and previously award-free employees

Some previously award-free employees are now covered by modern awards, and this has created issues as to how to transition wage rates to the relevant modern awards for these employees.

This question was recently received by WorkplaceInfo.

Q  We have an office in Brisbane, which employs a number of casual merchandisers.

In Queensland, such employees were previously award-free, although the Retail Industry Award was used as a guide with respect to their employment entitlements.

We have been advised that our merchandisers are now covered by a modern award (the Commercial Sales Award 2010).

We are confident their current casual hourly rate is higher than the modern award rates but we are unsure how to implement the transitional provisions of the modern award regarding employees with no previous award coverage.

What are the minimum requirements under the transitional provisions in this case?

A  It should be noted the transitional provisions under a modern award do not commence operation until 1 July 2010. From this date, the transitional provisions will apply to both the wage rates and the casual loading, although this is applied separately.

Firstly, the ‘total transitional amount’ must be determined, after which the relevant ‘transitional percentage’ is applied to achieve the amount to be added, or deducted, depending on whether the rate under the modern award is higher or less than the current rate.

Because these employees were award-free, the transitional amount is the difference between the Federal Minimum Wage (FMW) ($543.78 per week) and the merchandiser rate under the modern award ($592.00 per week). The total transitional amount is $48.22.

The transitional percentage from 1 July 2010 is 80%, meaning the transitional amount to be deducted from the modern award rate is $38.57. On the first pay period to commence on or after 1 July 2010, the minimum weekly wage rate will be $592.00 – $38.57 = $553.43 per week (or the hourly equivalent, ie divided by 38).

Casual loading

In the case of the casual loading, the same principle applies.

The current casual loading is zero, while the casual loading in the modern award is 25%. The total transitional percentage loading is 25% (25% – 0%).

The initial percentage of the total transitional percentage loading is 80% of 25% = 20%. This is deducted from the modern award percentage (25% – 20%) resulting in a casual loading of 5%, which is applicable from the first pay period to commence on or after 1 July 2010.

The transitional provisions mean the casual loading will be adjusted upwards on 1 July each subsequent year, in the following manner:

• 1 July 2011 — 10% (60% × 25% = 25% – 15%)
• 1 July 2012 — 15% (40% × 25% = 25% – 10%)
• 1 July 2013 — 20% (20% × 25% = 25% – 5%)
• 1 July 2014 — 25%

Where the current wage rate, casual or part-time loading, weekend penalty rate or shift allowance/penalty is higher than the appropriate rate in modern award the same percentage applies, except the transitional amount is added to the modern award rate.

Source: Paul Munro, IR Consultant.

WorkplaceInfo - www.workplaceinfo.com.au

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