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How can I get my head around the new awards system?

Monday, 8 November 2010 | By Martin Nally

I’ve read a lot in the news lately about employers being fined for underpaying employees. The new awards rules seem very hard to get my head around. How can I avoid inadvertently getting into trouble over this?


Now the dust has settled over the election, the spectre of yet another possible change to employment law has diminished.

It has been replaced with the harsh reality that this is as good as it gets for the next few years.  So what is Fair Work, what are the risks and what should you do as a small operator?


Fair Work Australia is the national workplace relations tribunal. It is an independent body with power to carry out a range of functions relating to:

  • the safety net of minimum wages and employment conditions
  • enterprise bargaining
  • industrial action
  • dispute resolution
  • termination of employment
  • other workplace matters.

The risks are that this legislation applies to all and there is no getting around the fact that you as an employer have obligations and your employees have rights.


So what do you do?


Firstly, acquaint yourself with some basic terminology. Here are some reasonably straightforward items to be aware of:


1. Modernised Awards:

  • On January 1, 2010 modern awards replaced thousands of federal and state-based awards (pre-modern awards). They cover most workplaces. The commencement of modern awards means that there have been changes to minimum terms and conditions for many employees. The changes vary by state, industry and employer. As a small business operator you need to familiarise yourself with the right award for your workplace.

2. NES (National Employment Standards):


10 standards that apply to all employment arrangements. The NES applies to all employees covered by the national workplace relations system regardless of the award, agreement or contract of employment that applies to an employee.


  • Maximum weekly hours of work - 38 hours per week, plus reasonable additional hours.
  • Requests for flexible working arrangements - allows parents or carers of a child under school age or of a child under 18 with a disability, to request a change in working arrangements to assist with the child’s care.
  • Parental leave and related entitlements - up to 12 months unpaid leave for every employee, plus a right to request an additional 12 months unpaid leave, and other forms of maternity, paternity and adoption related leave. Watch this space.
  • Annual leave - four weeks paid leave per year, plus an additional week for certain shift workers.
  • Personal/carer’s leave and compassionate leave - 10 days paid personal/carer’s leave, two days unpaid carer’s leave as required, and two days compassionate leave (unpaid for casuals) as required.
  • Community service leave - unpaid leave for voluntary emergency activities and leave for jury service, with an entitlement to be paid for up to 10 days for jury service.
  • Long service leave - a transitional entitlement for employees who had certain LSL entitlements before January 1, 2010 pending the development of a uniform national long service leave standard.
  • Public holidays - a paid day off on a public holiday, except where reasonably requested to work.
  • Notice of termination and redundancy pay - up to four weeks’ notice of termination (five weeks if the employee is over 45 and has at least two years of continuous service) and up to 16 weeks redundancy pay, both based on length of service.
  • Provision of a Fair Work Information Statement - employers must provide this statement to all new employees. It contains information about the NES, modern awards, agreement-making, the right to freedom of association, termination of employment, individual flexibility arrangements, right of entry, transfer of business, and the respective roles of Fair Work Australia and the Fair Work Ombudsman.

3. BOOT: Better Off Overall Test.


This is a new standard or test in establishing that agreements are better off overall for employees in comparison to what existed previously.


4. Small Business Fair Dismissal Code:


A code exists for small businesses which outlines the processes which must be used in times of dismissal.


5. Transfer of Business:


If you take over another business through an acquisition or some agreement you must take care as the terms of employment may continue for those employees that transfer. The Fair Work Acts sets out what happens and provides rules in these circumstances.


This may seem onerous but it is law. There is no need to panic but you do need to be on top of these matters.


Don’t wear a ball gown to a BBQ and overreact, but do take it seriously. Practically, if you use the net and call the Fair Work help lines the advice is fair but not tailored to your needs.


The other observation is that like any help line the advice is only as good as the person you speak with and frankly you never talk to the same person twice!


If you are all at sea then seek advice from an independent advisor. Business operators need quality advisors to sort the wheat from the chaff.