Modern award changes effective 1 March

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Modern award changes effective 1 March

From 1 March 2020 major, administratively difficult changes have been made to a number of modern awards that are likely to affect members.  These changes don’t apply to the two main transport awards but they do apply to the Clerks – Private Sector Award 2010 (employment of administrative staff) and the Manufacturing and Associated Industries and Occupations Award 2010 (employment of qualified mechanics).

These changes relate to annualised wage arrangements ie. where a salary is paid that is designed to compensate the employee for all payments and allowances under the modern award e.g. overtime. The variations will affect existing and new annualised salary arrangements for permanent award covered employees and will require all employers who employ people covered by the relevant awards to take action to ensure compliance is achieved from 1 March 2020.

The Fair Work Commission has designed these new provisions so that employees on annualised wages receive at least the equivalent amount that they would have been paid had the award entitlements been strictly applied throughout a 12 month period. This involves three levels of administrative burden.

The first administrative burden arises because an employer must now record an agreement which establishes:

·         The annualised wage;

·         What specific award clauses and the benefits they provide are included in the annualised wage;

·         The calculation used in determining the wage (evidencing inclusion of the entitlements conferred by the award);

·         The outer limit of ordinary hours attracting penalty rates; and

·         The outer limit of overtime that the employee could be required to work over a pay period or roster cycle before receiving excess payment above the annualised salary.

The second level of administration arises because, every 12 months from start of the annualised wage agreement (or on termination of employment), the employer must calculate the remuneration the employee would have received under the award and reconcile this with the wage that was paid to the employee throughout the preceding period.  If an employee would have been paid more under the award, then the employer has 14 days to remunerate the employee the difference between the agreement amount and the amount under the award.

The third level of administration involves the mechanisms the employer must put in place to verify an employee’s start and finish times and any paid and unpaid breaks: some employers are going back to a time clock system.  For these records to be kept in accordance with the new award provisions, they must be signed by the employee or acknowledged in writing or electronically every pay period or roster cycle.

Call NatRoad on 02 6295 3000 for more information.