HomeLocked20 things you should know about the Fair Work Act

20 things you should know about the Fair Work Act

In 2009 and throughout 2010 the Fair Work Ombudsmen recouped $26.1 million in employee underpayments and received 1.1 million calls from businesses enquiring how to legally pay their staff. This was a result of the new Fair Work Act (FWA). But a quick Twitter poll revealed many of you are still confused, so this may help…

Hannah Mills, solicitor for EI Legal said: “Employers must constantly check that they are complying with the Fair Work Act, and contact Fair Work Australia or a legal consultant if they are unsure of anything.”

EI Legal has identified 20 important points that you should know about the FWA.

1. Application of Modern Awards. 122 industry and occupational Modern Awards commenced on January 1, 2010. Employees covered under these awards can apply for Unfair Dismissal Claims. These awards replaced thousands of federal and state-based awards to provide one set of minimum conditions for employees and employers across Australia.

2. Guarantee of annual earnings. In order to avoid the application of Modern Awards, employers with Award-covered employees earning more than the high income threshold (currently set at $113,800) should enter into “guarantees of annual earnings” with such employees, which guarantees their wages, non-monetary benefits with an agreed value and amounts paid on behalf of any such employee will exceed the “high income threshold”.

3. Transitioning. There is a transitional process under most Modern Awards which provides for the incremental phasing in (in five equal instalments of 20 percent until 2014) of: minimum wages, piecework rates, industry allowances, casual/part-time loadings, weekend and public holiday penalties and shift allowances.  Employers can only use the published Modern Award wage, penalty or loading where it is higher than the equivalent pre Modern Award entitlement.

4. Individual Flexibility Agreement (IFA). Both parties can vary certain Modern Award terms. For example, an employee’s hours of work may differ to the arrangements set out in the applicable Modern Award to suit the needs of the employer and employee. The IFA must be in writing. It may be terminated within the conditions set out in the contract/Award.

5. Enterprise agreements. Can have a nominal term of four years and are a good way to achieve long-term flexibility within your business. Enterprise agreements must be approved by 50 percent of those who vote, and are then assessed by Fair Work Australia to ensure it is in the employee’s best interest.

Jen Bishop
Jen was the publisher at Loyalty Media and editor of Dynamic Business, Australia's largest circulating small business magazine, from 2008 until 2012. She is now a full-time blogger at The Interiors Addict.