New awards and minimum employments standards

Although we've known that the start date for one of the most complex changes to industrial regulation in a generation was looming, how prepared are you to run this new IR race?

In just over a month employers will be expected to begin operating under the modern award system. This exercise has seen thousands of awards reduced to around 130 national awards for specific industries or occupations. It's been an enormous undertaking with the devilish detail of applying the award provisions now to be worked through.

Also in January 2010 the last part of the Fair Work Act 2009 starts-the national employment standards. These are new core standards that underpin the terms of any modern award and enterprise agreement. They are a set of extensive employee rights that include the new right to request a change in working conditions for employees returning from a period of parental leave and generous redundancy payments for all national system employees.

Helping you run the race AFEI has been heavily involved in the 18 month long award modernisation process, representing members interests. We have also submitted our objections to those NES standards that impose new obligations on employers without any evidence of the need for increased regulation, such as the expansion of redundancy and the parental leave entitlements.

Key features of the NES and modern awards

Here are some key features to be alert to:

The National Employment Standards These are minimum non wage entitlements applying to all employees which cannot be modified to an employee's detriment:

Hours

38 hour week, employees can be required to work 'reasonable overtime' but may refuse to work additional hours if they are 'unreasonable'.

Parental Leave Employees responsible for the care of a child may request flexible working arrangements until their child reaches school age. The employer may refuse on 'reasonable business grounds', but this is not defined in the Act. Each parent has a separate entitlement to 12 months' unpaid parental leave or one parent can request up to 12 months additional leave. Casual employees who have worked with the one employer on a regular and systematic basis over a 12 month period also have this entitlement. Where a pregnant employee needs to be transferred to a safe job for OHS reasons, and no safe job is available, she is entitled to paid leave for the risk period.

Annual leave

The four week entitlement (five for certain shift workers) to annual leave will accrue progressively for all periods of employment other than periods of unpaid leave, unpaid absence (other than community service leave) and unauthorised leave. Progressive accrual means that leave accrues continually, rather than by a defined period of time (e.g. annual service, or monthly service) so employees do not have to wait for a certain period of service before they are entitled to take leave. An employer cannot 'unreasonably' refuse a leave request. Annual leave is to be paid at the employee's base rate of pay (excluding overtime and penalty rates, bonuses and similar payments).

Personal carers/compassionate leave The 10 day paid personal/carers leave entitlement will be accrued progressively, as with annual leave and accumulates from year to year. There is no cap on the amount of leave which can be accumulated. Employees are entitled to an additional two days paid compassionate leave per occasion and two days of unpaid carer's leave per occasion if their carer's leave has been exhausted. There are notice and evidence requirements. Casual employees are entitled to compassionate leave of two days unpaid leave per occasion.

Community service leave

An employee who engages in an eligible community service activity (as defined in the legislation) is entitled to on unpaid (except for jury duty) absence from work if the absence is reasonable in all the circumstances. There are notice and evidence requirements to be met. Employers are required to pay the first 10 days absence for jury duty. Payment is the difference between what the employee was paid for jury duty and the employee's base rate of pay.

Long service leave Long service leave remain, for the time being, covered by current state and territory legislation, and where relevant, award or agreement provisions. The federal government intends to introduce a new national long service leave standard.

Public holidays

The NES provide the following public holidays:

• Christmas Day, Boxing Day, New Year's Day, Australia Day, Anzac Day, Queen's Birthday, Good Friday and Easter Monday • a substitute public holiday under a state or territory law where, for example, a public holiday falls on a weekend

• any other public holiday under a state or territory law, including a regional public holiday in the place where the employee works.

An employer can ask an employee to work on a public holiday if the request is 'reasonable'.

Notice of Termination and Redundancy The NES prescribes the periods of notice which must be given or payment in lieu made. It also prescribes the scale of payments to be made where:

• the employee's employment is terminated at the initiative of the employer because the employer no longer requires their job to be done by anyone

• the employer is insolvent or bankrupt.

Small business (less than 15 employees) is exempt from redundancy payments; and the notice and redundancy payments requirements do not apply to certain categories of employees, including casuals, employees on probation, fixed term or seasonal employment.

Awards and agreements may provide more generous redundancy payments.

The Fair Work Information Statement Employers have to give new employees a Fair Work Information Statement as soon as practicable after they start work.

This is a fact sheet which sets out an employee's rights and entitlements at work, including the NES, modern awards, agreement making, right to join a union and the role of Fair Work Australia. Its purpose is to give employees advice about where to go for information and help, as well as providing contact details for FWA.

The information sheet must be given to all new employees who start employment after 1 January 2010. It does not have to be given to current employees.

Employers do not have to give the information sheet to an employee more once in any 12 month period where they employ an employee more than once in the 12 month period (e.g. a casual employee).

Modern awards

Modern awards will replace existing awards (except those applying to a single enterprise) and NAPSAs from 1 January 2010.

Modern awards will cover all employees who fall within the scope of the modern award except:

• high income employees, currently $108 600 ( the high income threshold is prescribed and varied from time to time) • employees covered by enterprise agreements (except to the extent that the modern award is referred to in assessing an enterprise agreement for compliance with the better off overall test and in determining minimum base rates of pay).

Transitional provisions in modern awards mean that rates of pay and certain other pay related entitlements will not come into force until 1 July 2010 and are to be phased in over five years. Award matters affected by transitional provisions include:

• minimum wages

• casual and part time loadings • Saturday, Sunday and public holiday penalty rates

• evening and other penalty rates • shift allowances.

During the period between 1 January 2010 and 1 July 2010, the pre-modern award pay-related entitlements remain in effect. That means entitlements contained within a pre-modern award (e.g. a federal award, or NAPSA) for these matters continue to operate.

From 1 July 2010, where there is an increase or decrease in wages or other pay related entitlement, the transitional provisions allow for the incremental phasing-in of changes over a five-year period.

However, all other entitlements under modern awards will apply from 1 January 2010.

Modern awards contain provisions covering:

• minimum wages

• types of employment (e.g. full-time, part-time, casual) • overtime and penalty rates

• work arrangements (e.g. variations to working hours) • allowances

• leave, leave loading and taking leave • superannuation

• procedures for consultation, representation and dispute settlement.

The fourth and final stage of the award modernisation process will be completed on 4 December 2009 when the Stage 4 awards are released.

This article was first published in November 2009 issue of the Adviser, which is produced by the Australian Federation of Employers & Industries (AFEI). The article is reproduced here with the permission of AFEI.