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In-house counsel warned over award rates

In-house counsel warned over award rates

Middletons' workplace relations and safety partner, Kathy Dalton, wipes away all misconceptions about modern award rates and shows what in-house counsel really do need to be aware of under the new rules.

Middletons' workplace relations and safety partner, Kathy Dalton, wipes away all misconceptions and shows what in-house counsel really do need to be aware of under the new rules


"A breach of award conditions can attract civil penalties of up to $33,000 for a corporate employer and individuals involved can also be penalised up to $6,600 for each breach. In the employment context, the likelihood of multiple breaches over an extended period of time quickly compounds the risk. On top of the risk of prosecution, a continued breach of award obligations can quickly create a very serious back-pay liability for a business. "

A number of myths and misconceptions amongst employers about the effect of modern awards, which came into effect on 1 January this year, is leading to non-compliance. Given the confusion and complexity, it is important that in-house counsel are alert to the compliance issues associated with the introduction of modern awards and are able to ensure that their organisations are meeting their obligations.

A key misconception at present is the assumption that provided a Company pays over-award rates, it will have met its obligations under modern awards. This is simply not true. Paying over-award rates will not ensure modern award compliance. There is more to modern awards than pay rates. For example, many modern awards contain detailed rostering and overtime arrangements and provide for a range of allowances. These award conditions will apply unless the appropriate steps have been taken to exclude or vary them.

Another common misconception is the assumption that professionals and those on high incomes will not be covered by modern awards. Again, such an assumption could lead to serious error. The scope of award coverage, particularly for managerial and clerical roles has changed significantly. Previous "award free" employees may now be covered.

Companies, and those within them responsible for regulatory compliance, are at risk both of legal sanction and workplace discord unless they undertake the hard work of transitioning to modern awards. A breach of award conditions can attract civil penalties of up to $33,000 for a corporate employer and individuals involved can also be penalised up to $6,600 for each breach. In the employment context, the likelihood of multiple breaches over an extended period of time quickly compounds the risk. On top of the risk of prosecution, a continued breach of award obligations can quickly create a very serious back-pay liability for a business.

Modern awards form part of the new safety net of minimum terms and conditions of employment which now regulates employers and employees in the national workplace relations system. There are approximately 120 modern awards which replace thousands of state and federal predecessor awards. Conditions regulated by modern awards include minimum wages, overtime, penalty rates, hours of work, allowances, and consultation and dispute settlement procedures.

There are a range of mechanisms available in relation to modern awards for businesses to vary or exclude their operation. These may include annualised salary arrangements, a high income guarantee of annual earnings, individual flexibility agreements or negotiating a collective agreement. However, unless businesses have undertaken the hard work of reviewing the modern awards that may apply to their business it is impossible to assess where existing conditions fall short of compliance and whether a mechanism to vary or exclude the modern award is available or appropriate.

A modern award compliant workplace will not happen by accident or mistake. Companies run a serious risk if they don't invest in reviewing their employment strategies now rather than later.

Kathy Dalton is a workplace relations and safety partner at law firm Middletons.


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