Fair Work Act - Compliance for Directors  

Changes to workplace laws are in force NOW ! Employers and employees need to be aware of these changes.  This following information is designed to make employers aware of their obligations and help them conduct a self-audit of their compliance with certain key requirements set out in the Fair Work Act 2009 and Fair Work Regulations 2009 and associated Acts and Regulations.

Background

From 1 July 2009, most Australian workplaces are governed by a new system created by the Fair Work Act 2009. Two of the key changes to occur under the new Fair Work System are:

1. A safety net of minimum terms and conditions of employment has been provided through the ‘National Employment Standards’ (NES)

2.  Modernisation of awards

National Employment Standards (NES)

The Fair Work Act 2009 provides employees with a safety net of minimum terms and conditions of employment through the National Employment Standards (NES).

There are 10 minimum workplace entitlements in the NES:

1. A maximum standard working week of 38 hours for full-time employees, plus ‘reasonable’ additional hours.

ACTION: Ensure your employment contracts and salaries paid allow for a maximum of a 38 hour week.

2. A right to request flexible working arrangements to care for a child under school age, or a child (under 18) with a disability.

ACTION: Change your HR policy to allow primary carers the option of asking for flexibility of hours in accordance with the new Act.

3. Parental and adoption leave of 12 months (unpaid), with a right to request an additional 12 months.

ACTION: Change you HR policy and practice to enable primary caregivers to ask for Parental Leave extension. Use your discretion to grant or deny these requests on individual cases with respect to your genuine business requirements.

4. Four weeks paid annual leave each year (pro rata).

ACTION: Ensure you accrue for 4 weeks of annual leave per year - accrued for in each pay cycle and employees become entitled to it as soon as it is accrued.

5. Ten days paid personal/carer’s leave each year (pro rata), two days paid compassionate leave for each permissible occasion, and two days unpaid carer’s leave for each permissible occasion.

ACTION: Ensure you accrue for the entitlements as directed in the Act.

6. Community service leave for jury service or activities dealing with certain emergencies or natural disasters. This leave is unpaid except for jury service.

ACTION: Ensure time-off is granted for eligible community service.

7. Long service leave.

ACTION: Ensure you accrue Long Service Leave in accordance with applicable State legislation (no change).

8. Public holidays and the entitlement to be paid for ordinary hours on those days.

ACTION: Ensure Public Holidays are paid for full-time and part-time staff whose ordinary work day falls on a gazetted Public Holiday. There may be a mutual agreement to work on a Public Holiday if the request to work on this day is reasonable and another day or part-day is given in lieu (for Award-free employees only).

9. Notice of termination and redundancy pay.

ACTION: Termination notice period is a sliding scale, increasing with employee service. Ensure all new contracts conform to this change. Where a role is made redundant (after following new consultative standards) compulsory severance pay will need to be calculated for employee service from 01/01/10.

10. The right for new employees to receive the Fair Work Information Statement.

ACTION: The attached ‘Fair Work Information Statement’ is to be provided to all new employees by their employer as soon as possible after the commencement of employment. Add the Fair Work Information Statement to new employee job offer packs.

Click here to view the Fair Work Information Statement.

(Please note that some conditions or limitations may apply to NES entitlements. For instance, there are some exclusions for casual employees)

Modern awards

In addition to the NES, your employees may be covered by a Modern Award. These awards cover an industry or occupation and provide additional enforceable minimum employment standards.

Modern awards may contain terms about minimum wages, penalty rates, types of employment, flexible working arrangements, hours of work, rest breaks, classifications, allowances, leave and leave loading, superannuation, and procedures for consultation, representation, and dispute settlement. They may also contain terms about industry specific redundancy entitlements.

A Modern Award that covers your industry or occupation may not apply to Managers or a high income employees. For example, where an employer guarantees in writing that an employee will earn more than $108,300 annually (indexed), a Modern Award will not apply, but the NES will.

Transitional arrangements to introduce the Modern Award system may affect employee coverage or entitlements under a Modern Award.

Modern Award examples:

• Building and Construction General On-site Award 2010 MA000020
• Clerks - Private Sector Award 2010 MA000002
• Hospitality Industry (General) Award 2010 MA000009
• Restaurant Industry Award 2010 MA000119
• General Retail Industry Award 2010 MA000004
• Aged Care Award 2010 MA000018
• Animal Care and Veterinary Services Award 2010 MA000118

Click here to view a more extensive list of Modern Awards.  

Transitional arrangements

Any increases or decreases in wages, loadings and penalty rates will be phased in from 1 July 2010.

Companies

From 1 January 2010, Modern Awards replace existing awards in most industries.

Trusts/Partnerships/Sole Traders

From 01 January 2010 to 31 December 2010 existing Awards cover employees unless the corresponding Modern Award provides a greater benefit/entitlement.

Click here for a self-audit checklist to assess your compliance with the requirements set out in the Fair Work Act. 

'Small Business' Definition and Unfair Dismissals

Many smaller businesses may have failed to note the important change to the definition of 'small business':

As of 1 January 2011, only businesses that employ fewer than 15 employees (by simple headcount) qualify as a small business when an employee makes an unfair dismissal claim.

Before the adjustment, a small business was one that employed fewer than 15 full-time equivalent employees.

This is an important distinction, especially if you employ a number of part-time staff and encourage job sharing and provide flexible working arrangements. Your employees may do the work of fewer than 15 full-time equivalent staff, but in themselves add up to more than 15 people. If this situation applies to your business, you will find that you're no longer eligible for the special unfair dismissal arrangements that apply to small businesses.

These special arrangements include a minimum employment period of 12 months before employees can make an unfair dismissal claim, and a simple Fair Dismissal Code to help employers ensure dismissals are not unfair.

Any business with 15 or more employees - by simple headcount - is now vulnerable to the same unfair dismissal rules that have already resulted in a surge of claims against employers.

For further information visit www.fairwork.gov.au or www.fwa.gov.au.   

Tel: 02 4421 2345Fax: 02 4421 2340