Extrastaff has been monitoring closely the effects of the Modern Awards since their inception January 01, 2010.

To date these changes mainly being conditions of employment, have been relatively straight forward in their implementation.

Recently momentum has been building to which on the 01 July 2010 rates of pay including safety net adjustment, casual loading, shift and overtime come into effect.

Safety Net Adjustment

On 3 June 2010, the Minimum Wage Panel of Fair Work Australia issued its Annual Wage Review 2009-10 to vary modern award minimum rates to take effect on 1 July 2010. The FWA must publish any varied modern award rates before 1 July 2010. The FWA has now published the draft determinations varying modern awards taking into account the Panel's decision of 3 June 2010. The draft rates by Modern Award can be viewed here.

Based upon a quick review it would appear that in most awards the hourly rate is still being calculated by taking the weekly rate, adding $26, and then dividing the increased weekly rate by the ordinary hours eg 38.

The final rates, incorporating any additional changes as the result of suggested amendments, will be published on the Fair Work Australia website prior to 1 July 2010.

Federal Awards

We are aware that an Award Based Transitional Instrument will continue to cover the employment of employees that are not covered by a Modern Award (subject to general award exemptions) and furthermore, will override the application of the Miscellaneous Award.

Therefore, in practice, this means that an employer will have to continue to apply old federal awards and NAPSA (State awards converted in to federal agreements) unless they are covered by an industry based or occupational based Modern Award.

However, most of these Award based transitional instruments will be terminated over the next couple of months!

There is a step by step approach to determining award coverage - made as simple as it can be!

1. If there is an enterprise agreement or enterprise award that specifically names you as the employer, then that will govern an employer and employees entitlements within the scope of such instrument and there is no need to go any further.
2. If point 1 doesn't apply, an employer should check to see if there is an 'industry based' Modern Award which covers the industry of the employer (or client in the case of on-hire firms). If there is, then that will be the award that will cover employees who fall within the classification structure.
3. If there is no 'industry based' Modern Award then look to see if there is an 'occupational based' Modern Award covering the specific occupation. If there is, then that will cover the employees who fall within the classification structure.
4. If there is no industry based or occupational based Modern Award that covers the employer or employees then you should continue to apply any old federal award or NAPSA which covered such work before 1 January 2010 (even for new employees). Continue to apply all of the terms and conditions within these old awards or NAPSA (including the pay scale summary sheet) until they are terminated by FWA (some may not be terminated). In Victoria, the 'industry sector rates' are included in this group of pre 1 January 2010 instruments which continue to apply.
5. If there are no pre 1 January 2010 awards or NAPSA that cover the work and there is no industry based award or occupational based award covering the work, then the Miscellaneous Award will cover the work, subject to the exemptions of course.
6. If none of the above apply and the employer and employee are 'award free' then employers must apply the National Employment Standards in conjunction with the National Minimum Wage.

Independent Contractors

Many clients engage individuals as independent contractors yet there still seems to be a large amount of confusion as to what constitutes a genuine and sustainable independent contracting relationship. The danger of blindly engaging an individual as an independent contractor without consideration for what constitutes a real independent contracting relationship are considerable and include the following:

1. The individual may be deemed by a tribunal or court to be an employee and accrued award and NES entitlements may be ordered against you;
2. The individual may be deemed to be an 'employee' under superannuation guarantee law and you may be subject to the Super Guarantee Charge for not making such contributions;
3. The individual may be deemed to be a 'worker' for the purposes of workers compensation and need to be included in your policy; and
4. You may be obliged to withhold income tax from payments to independent contractors, especially where they are labour hire independent contractors.

The Australian Government has released a new guide on independent contracting, what is genuine contracting and what the obligations of 'hirers' of independent contractors are. Click here to view the online guide.

For clients that engage independent contractors we would recommend that you read the guide to refresh your memory.

Superannuation Guarantee

The Superannuation Guarantee will, as a part of the recently released Australian Government response to the Henry Tax Review, increase to 12% over the next ten years.

The increase in the minimum employer superannuation contribution should be taken in to account when considering wage increases under enterprise agreements and remuneration reviews. It is important that current bargaining and negotiations take into account the fact that the Superannuation Guarantee will increase by 0.25% in 2013-14 and then again in 2014-15, with the increases increasing to 0.5% each year until the total contribution becomes 12% in 2019-20.