If you employ staff who are covered under the National Industrial Relations system (the Fair Work Act), it is highly likely that many, if not most, of these employees will be covered by one of more of the 120 + Modern Awards.
Modern Awards are effectively legal documents which outline the minimum terms of employment, including pay rates and other conditions, of employees who are deemed to be covered by them. They are structured in accordance with core industries and key occupations and were put in place in an attempt to simplify things under a National Industrial Relations framework which was a shift away from the old State and Territory based paradigm.
With the exception of situations where your organisation is covered by an approved Enterprise Agreement., and the rare instances of Award Free employees, it's entirely likely that your staff are covered by an Award, and you therefore as the employer have an obligation to comply with the conditions of the Award, even if you pay well in excess of the minimum rates of pay detailed within them.
So how do you know which Award applies to your business, and your Employees? Here is my 4 step process to help you determine this. as a word of warning it is possible, and in fact likely, that more than one Award will apply, and you will have several different Awards you will need to understand and comply with.
Step 1: Industry
What industry does your business work in and is there a Modern Award relevant to that industry?
Example your business is a Child Care Centre, the applicable industry Award is the Children's Services Award
When you have found the correct Industry Award, read the Coverage Clause, which is typically Clause 4. Reading this will assist you in identifying whether this Award covers your business and operations.
Step 3 Classifications
If you have found the Industry Award, and the Coverage Clause confirms that your business is covered by this Award, you need to review the Classifications to determine which specific employees / positions are covered by this Award as detailed in the Award Classifications. This is typically a Schedule at the bottom or back of the Award. The Schedule called 'Classification or Classification Structure' will give you an overview of which roles are covered under this Award. It is entirely possible, and in fact likely, that not all positions will be covered, this means you will have more than one Award operating in your business.
If you have found that not all of your positions are covered by this main Industry Award, you then need to look to other Awards which do cover those positions. These are called Occupation Awards. For example, if your business generally is covered by the Manufacturing and Associated Industries and Occupations Award, but you also have administration and customer service staff, you will find no classification relevant to those staff in the Manufacturing Award. You would then look towards the Clerks Private Sector Award for coverage of those employees.
What are your obligations?
Now that you have identified the Award(s) that apply, you need to comply with the terms and conditions of employment which are set out in those Awards. That's not to say that you can't or shouldn't pay high rates or offer more generous conditions, these are purely the minimum entitlements.
If you are looking to alter the conditions of employment, for example pay a more generous wage in lieu of loadings and allowances, that is generally possible provided you follow the correct flexibility process as detailed in your Award, pass the Better Off Overall Test and have the right documentation in place, and of course have the agreement of the individual employees.
To help you work through the sometimes complex process of selecting the right Awards for your business I've created a simple guide to assist, get your copy here.
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