In brief: Recent significant variations to modern awards will impact how employers should approach bargaining for new enterprise agreements. 

As part of the 4-yearly review of modern awards being undertaken by the Fair Work Commission (FWC), a number of variations have been made modern awards which should be considered when employers are bargaining for new enterprise agreements and submitting them for approval against the better off overall test (BOOT). 

Changes to entitlements in most modern awards

The following significant changes to entitlements have recently been made in most modern awards:

  • leave to deal with family and domestic violence
  • right to request casual conversion
  • minimum engagement periods for part-time and casual employees
  • requirement to pay entitlements on termination within 7 days; 
  • limit on deductions from wages on termination of employment; 
  • changes to penalty rates for retail employees; 
  • proposed changes to allowances under the Construction awards (from 1 December 2018). 

Does the BOOT fit? 

In accordance with section 193 of the Fair Work Act 2009 (Cth), the BOOT is measured “as at the test time”, being the date the enterprise agreement is lodged with the FWC, not the date it was voted up by employees.  

According to a recent announcement from the FWC, this means that “any changes made to awards prior to lodgment will be taken into consideration when a Commission Member assesses your agreement for the BOOT”.

Therefore, variations to modern awards, such as the entitlements referred to above, will need to form the basis of undertakings if the agreement is unlikely to meet the BOOT and the varied entitlements were not taken into account when the agreement was made. 

FWC recommends the inclusion of a NES precedent clause in all enterprise agreements

The FWC has also recommended employers use a “NES precedent clause” for inclusion in all enterprise agreements submitted to the FWC to address situations where a clause in an enterprise agreement is inconsistent with the National Employment Standards. The proposed clause is intended to reduce the incidence of FWC members requesting undertakings, so that where there is any inconsistency, the more generous entitlements under the NES will prevail over provisions in an agreement. An example of the clause is: 

This Agreement will be read and interpreted in conjunction with the National Employment Standards (NES). Where there is an inconsistency between this agreement and the NES, and the NES provides a greater benefit, the NES provision will apply to the extent of the inconsistency.

Reduce the risk of an agreement being declined by the FWC

Employers are encouraged to seek advice prior to submitting agreements for approval to the FWC to ensure the BOOT is met and the agreement is approved, taking into account the range of significant variations to modern awards recently introduced. A proactive approach will reduce the risk of an agreement being declined approval by the FWC, which statistics reveal is an increasingly common occurrence. 

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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