If the pay rates under the modern award are lower than the pre-modern award pay rates the decrease will be phased in over a period of four years in 20 per cent instalments, starting from the first full pay period on or after 1 July 2010. The new lower pay rates will apply alone from the first full pay period on or after 1 July 2014.
Employers also need to factor in any annual wage reviews increases that Fair Work Australia may make, which will generally take effect from the first full pay period on or after 1 July each year. If the modern award contains lower pay rates, an employer may choose to keep paying the higher pre-modern award entitlements to ensure that existing employees do not suffer a reduction in take-home pay. If an employee believes their take-home pay has been reduced, they can apply to Fair Work Australia to make a ‘take-home pay order’ to ensure that the employee is not worse off.
What happens if there is a new loading or penalty?
Where there was no existing loading or penalty applying under the existing instrument then the new loading or penalty in the modern award is also progressively introduced.
The increases will be phased in over a period of four years in 20 per cent instalments, starting from the first full pay period on or after 1 July 2010. The new higher pay rates will apply in full from the first full pay period on or after 1 July 2014.
Employers also need to factor in any annual wage increases that the Fair Work Australia Minimum Wage Panel may make, which will generally take effect from the first full pay period on or after 1 July each year.
Modern awards set out minimum pay rates. Employers can choose to pay more than the minimum rates at any time. If the pay rates in the modern award are higher than those in the pre-modern award, the employer may choose to pay the modern award rates immediately. However, base rates of pay, loadings and penalty rate entitlements are phased separately and care needs to be taken to ensure that the employees are paid their minimum entitlement under each.