Pay

Modern awards and related transitional provisions are in no way intended to result in less take-home pay.

However, if this occurs, you or your representative can apply to Fair Work Australia, which can make any order it considers appropriate to remedy the situation.

While modern awards will generally operate from 1 January 2010, a number of modern awards include a model phasing schedule under which pay rates and some related entitlements will be phased in progressively to assist affected employers and employees in the move to the modern award system.

Under the model phasing schedule, any increases or decreases in wages, loadings, penalty rates and shift allowances will be phased in over 5 equal instalments from 1 July 2010 to 1 July 2014. 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.

Subject to other specific transitional provisions which may be contained in certain modern awards, all other entitlements under modern awards apply from 1 January 2010.

Consult your relevant modern award for specific transitional arrangements.

The model phasing schedule is included in many modern awards.

The model phasing schedule allows wages, some penalty rates, casual loadings and shift allowances which are higher or lower than pre-existing conditions to be introduced progressively over 5 equal instalments from 1 July 2010 to 1 July 2014.

Where wages, loadings and penalty rates are affected by the model phasing schedule, the pre existing rates continue to apply until the first full pay period on or after 1 July 2010. 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 purpose of the model phasing schedule is to lessen the financial impact of the new wages and penalty rates by progressively phasing in the increases and decreases in minimum conditions affecting pay.

I'm an employer, I pay my employees more than the award, do I have to increase pay or entitlements?

Your monetary obligations as a result of modern awards may be absorbed into any over-award payments you may be providing.

Modern awards do not require you to maintain or increase any over-award payments to your employees, although reducing their pay may be a breach of their employment contract.

I have never paid penalty rates before, what do I do?

Where an employee was not, or would not have been (e.g. new employers need to check what their employees would have been entitled to), entitled to a penalty rate before 1 January 2010, the modern award penalty rate will not apply at all until the first full pay period on or after 1 July 2010.

From the first full pay period on or after 1 July 2010 until the first full pay period on or after 1 July 2014 the modern award penalty rate(s) can be progressively phased-in in 20% annual instalments.

The penalty rate(s) in the modern award will apply in full from the first full pay period on or after 1 July 2014. 

The below table shows how much of the modern award penalty rate(s) you need to pay for each year in this situation:

Please note that where an employee was, or would have been, entitled to a casual loading before 1 January 2010 (including the default casual loading for award-free employees), the casual loading that you need to pay is worked out by reference to both the pre-modern award casual loading and the casual loading set out in the modern award.

Do the model transitional provisions apply to all types of employees or just adults?

The model transitional provisions apply to all categories of employees covered by the modern award, not just adults. This includes juniors, trainees, apprentices and employees with a disability.

What do I pay my employees if the pre- modern award provides a penalty payment for a period of time, and the modern award gives an overtime payment for the same period of time?

1. From 1 January 2010 until the first full pay period on or after 1 July 2010 - you need to pay both the overtime rate and the pre-modern award penalty rate.
2. From the first full pay period on or after 1 July 2010 - you need to pay the full overtime rate and 80% of the pre-modern award penalty.

This is because overtime rates commenced in full from 1 January 2010 and penalty rates from pre-modern awards are phased out in 20% increments over a four year period from the first full pay period on or after 1 July 2010.

What happens when the penalties under the pre-modern award and modern award are the same?

If a pre-modern award loading or penalty rate is exactly the same as the modern award loading or penalty rate,. then the modern award loading/penalty rate applies in full from 1 January 2010.

What if I don't calculate the wages correctly? Will I be fined or prosecuted by FWO?

The FWO’s first objective is to educate people about the changes to rates of pay that occur from 1 July 2010 and to assist them understand how to calculate rates of pay under the transitional arrangements.

Under the Fair Work Ombudsman investigative process and litigation policy, it is generally the case that if an employer readily fixes a mistake (i.e. by making good any underpayments and putting in place systems to ensure they get it right in the future), the FWO will take this into account in determining what, if any compliance action may be appropriate. Normally the FWO would not prosecute an employer in such circumstances.

However, if an employer has deliberately breached the law, or if the employees concerned are vulnerable workers, then, consistent with its Litigation Policy, FWO will treat the matter seriously, and litigation may be considered to be an appropriate compliance response.

What is an industry allowance?

An industry allowance is a payment that is made to all employees across an industry, to compensate for the nature of work in the industry.

The terms of each instrument need to be considered to determine whether a particular allowance is considered an ‘industry allowance’ and it is important to consider the nature of the allowance rather than what it is called. 

It is possible, for example, that one modern award can cover more than one industry or occupation and that each of these industries or occupations may have had a separate ‘industry allowance.’ Alternatively, only one of the industries covered by the modern award may have had an industry allowance.

What impact do industry allowances have?

Industry allowances are included in minimum wage rates for phasing purposes.

If an industry allowance formed part of an employee’s pre-modern award rate of pay it will be included in the published Pay Scale Summary.

Generally all other allowances (besides industry and shift allowances) in modern awards commenced in full from 1 January 2010.

My employer is not paying my super - what do I do?

If you think your employer is not paying your superannuation, the Australian Tax Office has processes in place to help you investigate this. For more information, visit ATO - unpaid super .