By Paris Lynch
Employee Relations Advisor
What are awards?
In Western Australia there are two Industrial Relations Jurisdictions. The Fair Work Act 2009 (Cth) (FW Act) covers National System Employers and the Industrial Relations Act 1979 (WA) (IR Act) and Minimum Conditions of Employment Act 1993 covers State System Employers. For more information on which system your business is covered by, contact the Employee Relations Advice Centre on 08 9365 7660.
Whilst the minimum employment standards are set out in the legislation, many employers are also covered by awards which prescribe additional employment entitlements. In the National System, these are called Modern Awards, and they provide entitlements in addition to the National Employment Standards. State Awards, which apply to State System Employers, contains entitlements in addition to the Minimum Conditions of Employment Act 1993. Awards will generally include entitlements such as minimum wages, overtime and penalty rates, hours of work, allowances, breaks and rostering provisions.
It is important for employers to be aware of the applicable Award/s that apply to their business and employees as failure to comply with an Award can result in underpayment claims and penalties.
When will an employee not be award covered?
Majority of employees will be covered by an Award. An Award will apply if it covers an employee and employer in accordance with the ‘Coverage’ or ‘Scope’ clause contained in the Award. Additionally, there needs to be no other provisions contained in the FW Act or the IR Act that provides or has effect, that the Award does not apply.
In the Federal System, where an employee earns above the high-income threshold, the employer and the employee can enter into a Guarantee of Annual Earnings. In this case the Award will continue to cover the employee for the purposes of unfair dismissal, however, the terms and conditions of the award, such as penalty rates, will no longer apply to that employee.
Some Managers and professionals may also not be covered by an award, however, it is important to investigate potential award coverage before assuming they are not.
Enterprise Agreements and Workplace Agreements provide the opportunity to negotiate terms and conditions of employment as an alternative to Awards. While in operation, the Agreement will override the Award unless specifically stated in the Agreement.
What type of awards are there?
Modern awards can generally be divided into industry and/or occupational awards. Similarly, in the State System, there are industry and/or occupational awards, as well as occupational awards for a specific industry. Industry Awards can only cover a business that operates in the industry as defined by the Award. Occupational Awards aren’t specific to a particular industry, rather the duties and tasks an employee is undertaking in the business.
When determining award coverage, generally employers should start by checking if there is a relevant Industry Award that covers the business. Where there is no Industry Award applicable, the employer may need refer to an applicable Occupational Award. This could also be the case where there is an applicable Industry Award but where certain positions are not covered by the classifications in that particular Industry Award.
How do I find out which award covers my business and employees?
Determining the appropriate award can be challenging. The below steps can be used as a starting point when determining award coverage:
- The ‘coverage’ and ‘definitions’ clauses in Modern Awards will specify the industry and/or occupations the award applies to. In State Awards employers will need to refer to the ‘area’ and/or ‘scope’ clause. State System Employers should also refer to the ‘named respondents’ within the award for further clarification on the type of businesses covered by that award.
- Check to see if there are any exclusions to the application of the Award that may impact the award coverage
- Refer to the ‘classifications’ section of the Award to determine if there is an appropriate classification for the employee’s duties and tasks.
It is strongly recommended employers get advice from the Employee Relations Advice Centre to establish which award may best cover a business and employees.
Practical case example
The case of Mr James Kaufman v Jones Lang Lasalle (Vic) Pty Ltd, looked into the award coverage of a high-income earner in the position of ‘Director’ who claimed he had been unfairly dismissed. The employer claimed the employee could not access unfair dismissal based on the following:
- The employee earnt above the high-income threshold at the time.
- The employer did not have an Enterprise Agreement.
- The employee was not covered by a Modern Award because he was a senior manager in a large real estate and asset management business.
The Fair Work Commission (FWC) reached its conclusion that despite the title of ‘Director’, the employee did not have direct reports and selling real estate made up a large portion of his position duties. Based on these factors, the FWC found the employees duties corresponded to the duties set out in the Real Estate Industry Award 2010 classifications.
It was raised by the FWC that although an employee is earning a high-income salary, it does not automatically mean they are not covered by an Award. It should also be highlighted that although an employee has a specific ‘job title’ which suggests they may not be award covered, it comes down the specific duties that employee is undertaking as part of that role to determine whether they are award covered or not.
Want to know more? Contact CCIWA’s Employee Relations Advice Centre team on 9365 7660 or email email@example.com