New awards delayed, but employers still face costs

Despite six-month delay, Rudd Government’s overhaul of industrial awards could still sting employers and employees

By Jayne Munday | September 3, 2009

Despite a six-month delay, the Rudd Government’s overhaul of industrial awards could still sting employers and employees, according to industry groups.

The Australian Industrial Relations Commission (AIC), which is responsible for the phasing-in of new modern awards, yesterday released a decision concerning the transitional provisions to be included in the priority and stage 2 industrial instruments.

In rationalising existing award provisions, Minister for Employment and Workplace Relations, Julia Gillard, has outlined new measures to reportedly "ease" cost burdens for employers.

These include delaying the start of higher penalty rates by six months until July 2010, and allowing additional costs, including pay increases, to be introduced in five instalments up to July 2014.

This decision was made due to a number of employers who lobbied to have the introduction of new wages and conditions postponed, allowing a period to make necessary arrangements.

"There should be adequate lead time to prepare for the operation of modern awards after their finalisation," the Commission says.

"In this regard we note that the stage 4 awards are not scheduled for publication until the end of 2009."

As the phasing arrangement will not apply to all changes to minimum conditions, the Commission says there is another important matter to address.

"Yet another consideration is that Fair Work Australia is required to conduct an annual review of minimum wages in modern awards and any increase resulting from such review is to operate from 1 July in the year in question," the AIRC says in yesterday’s statement.

The Commission has decided phasing will commence on July 1, 2010, rather than the original legislation contemplation of January 1, 2010.

"The effect will be that where the phasing provisions are included in an award the pre-modern award conditions relating to minimum wages, casual and part-time loadings, Saturday, Sunday, public holiday, evening and other penalties and shift allowances, will continue to apply until 1 July 2010 when the modern award obligations will commence," the Commission says.

While the Commission has postponed phasing for the convenience of employers, the Australian Chamber of Commerce and Industry (ACCI) remains sceptical of changes.

Chief Executive Peter Anderson says even with the transitional changes announced yesterday, the new national industrial awards will have a considerable impact on employers.

"Recognition by the tribunal that current economic conditions warrant a cautious approach in making new awards is welcome.

"However, the tribunal’s conclusion that ‘cost increases are in prospect’ will disappoint employers who have relied on Government assurances that the process was not intended to increase their costs," he says.

"Creating national awards is a complex process. Implementation issues will continue to arise beyond today’s decision, even with five year phasing-in arrangements.

"[This] decision provides a basis for dealing with many of these implementation issues but will need more detailed analysis in each industry sector before its full impact can be assessed."

In general, the Commission rejected a majority of proposals by employer and employee groups to alter the proposed modern awards, except for the Horticulture Award, which is expected to undergo further review.

Specific clauses included in yesterday’s report which will specifically affect employers include minimum wages, and loading and penalty rates.

Employers obliged by a transitional minimum wage instrument or award-based transitional instrument prior to January 2010 must abide by new wage cut-offs.

They must pay no less than the minimum wage for the classification in this award minus the specified proportion of the transitional amount, which ranges from 80 percent in 2010 to 20 percent in 2013.

In this clause, minimum wage includes the minimum wage for a junior employee, an employee to whom training arrangements apply, and an employee with a disability.

It also applies to a piecework rate and any applicable industry allowance.

Similar transitional amounts also apply to loading and penalty rates.

For further information and a full-copy of the Commission’s report, click here.

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