The direction of the law covering rights, entitlements and obligations of employees in Victoria has been chang-ing. In the past, the AIRC made orders, called awards, which were binding only on the parties. WorkChoices legislation further narrowed their scope. The Fair Work regime gives minimum national standards and new modern awards with flexibility terms a central role in industrial relations, except for high-income workers.
FW Act and modern awards
Under the FW Act, awards have a more central role in the industrial relations system than under the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (“Work Choices”). Awards provide part of the safety net of terms and conditions, along with the NES (see “National Employment Standards”). Awards are also used as a reference instrument to decide whether an agreement passes the “no disadvantage test” (pre-1 July 2009) and the “better off overall test” (post-1 July 2009).
From 1 January 2010 new modern awards and the NES took the place of the old awards. The old awards no longer apply to any employees or operate for any other reason under the Act, save as a historical reference or where expressly, or by deeming, they are to be incorporated into modern awards, the NES or enterprise agreements. Modern awards have reduced the overall number of awards by combining the coverage of a number of awards into one award.
Modern awards do not apply to employees on high incomes. The FW Act defines a high-income earner as an employee who has a written guaranteed income, accepted by the employee of greater than the amount set by regulations. From 1 July 2016 the amount set by the regulations is $138,900 for full-time workers. Note that employees are not excluded solely because of the level of income, they must also have a written and accepted guarantee of a specified income to be excluded from award coverage (see ss 47(2), 329–333 FW Act).
Modern awards can contain 10 minimum standards in addition to the NES (s 139). These minimum standards are:
1 minimum wages, including skill-based classification;
2 type of employment;
3 arrangement of work, including hours, rosters, consultation regarding changes to rosters and breaks;
4 overtime rates of pay;
5 penalty rates, including for shift, weekend and public holiday;
6 annualised wage and salary arrangements;
7 allowances, including for expenses incurred, additional skills, responsibilities or disabilities;
8 leave, leave loading and arrangements for leave;
9 superannuation; and
10 procedures for consultation, representation and dispute settlement.
Modern awards must also include a flexibility term. Such a term helps an employer and employee to reach an arrangement to vary the effect of particular terms of an award to meet the genuine requirements of the parties. An employee must be better off overall on the flexibility arrangement than under the terms of the relevant award. The flexibility arrangement must be in writing and signed by each party.
Modern awards may also include terms relating to outworkers, industry specific redundancy schemes (e.g. the construction industry redundancy fund) and incidental and machinery terms (see ss 140–142 FW Act). Modern awards may also provide additional detail of the NES required for the specific industry.
As part of the award-modernisation task, the Australian Industrial Relations Commission created a default award, which will apply to all non-managerial employees who are not covered by a modern award.
It is not always easy to find out whether a federal award applies. The best source of information for union members is their union, which will be familiar with awards within its industry.
A breach of an award can lead to prosecution by authorities as well as to civil action.