Wages and conditions

Minimum entitlements for wages and conditions of employment are most often found in enterprise agreements or modern awards. Employers must provide their employees with at least their minimum entitlements.

Some employees are not covered by an award or an enterprise agreement. For these employees, a safety net of minimum wages and conditions is created by the national minimum wage order and the National Employment Standards (NES).

Wages and conditions

Annual wage review

Reviewing and setting minimum wages has been a key function of Australia’s national workplace relations tribunal since it was first established as a court in the early 1900s.

Under the Fair Work Act, each year the Commission must review the national minimum wage for employees not covered by awards or agreements, and modern award minimum wages.

The Annual Wage Review 2017–18 decision directly affects more than 2.3 million employees who have their wages set by an award, and a significant number of employees paid at junior or apprentice/trainee rates based on the national minimum wage.

Panel

Each year, a seven-member expert panel is constituted to conduct the wage review. The panel comprises:

  • the President of the Commission
  • three other full-time Members of the Commission
  • three part-time Members with knowledge of, or experience in, workplace relations, economics, social policy, business, industry or commerce.

The panel must review minimum wages in modern awards and transitional instruments, as well as the national minimum wage order from the previous annual wage review. In accordance with objectives set out in the Fair Work Act, the panel takes into account specific economic, social and collective bargaining considerations, such as:

the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth.

Decision

On 1 June 2018, the panel issued its decision to:

  • award an increase to the national minimum wage of 3.5 per cent to $719.20 per week, or $18.93 per hour based on a 38-hour week—this is an increase of $24.30 per week or 64 cents per hour
  • increase all modern award minimum wages and most transitional instrument wages by 3.5 per cent.

The panel’s determinations came into operation on 1 July 2018 and took effect from the first full pay period on or after that date.

You can read the decision at [2018] FWCFB 3500 or the summary on our website at https://www.fwc.gov.au/awards-agreements/minimum-wages-conditions/annual-wage-reviews/annual-wage-review-2017-18/decisions.

Timeliness

The 2017–18 Annual Wage Review decision was issued on 1 June 2018, well before the portfolio budget statements target of 30 June.

Modern awards

Modern awards, together with the NES, provide a minimum safety net of terms and conditions for employees. There are 122 industry and occupational modern awards operating across Australia.

In addition, at 30 June 2018, there were 33 modern awards covering specific enterprises or state public sector bodies that are part of the national workplace relations system.

4 yearly review

The Fair Work Act requires the Commission to review all modern awards once every four years. The first 4 yearly review began in February 2014 and is expected to be completed by the first quarter of 2019.

The review’s initial stage considered jurisdictional issues. Having dealt with those matters, the Commission is reviewing four groups of individual awards and 17 common issues that apply across multiple awards.

Throughout the review, the Commission has welcomed and encouraged input from those with an interest in how award provisions apply in the workplace.

The review is a significant and complex body of work. During 2017–18, the Commission:

  • held 167 hearings, conferences or mentions
  • issued 52 decisions and 72 statements
  • posted 4,236 documents to its website
  • sent 452 emails to subscribers.

Exposure drafts

As part of the 4 yearly review, the Commission develops and publishes exposure drafts for revised versions of each modern award. Exposure drafts are updated and republished as issues are determined.

Exposure drafts for all awards of general application have been produced and published for comment. Having previously divided awards into four groups, in 2017–18 the Commission published exposure drafts for 40 awards allocated to group 4 and continued to refine the exposure drafts for the awards in groups 1, 2 and 3. The review of the majority of awards in groups 1, 2 and 3 is substantially complete.

In 2017–18, Full Benches of the Commission made decisions on a range of technical and drafting issues which will affect all four groups of awards. Determinations dealing with claims for substantive changes to modern award entitlements during 2017–18 covered issues such as classifications and commission-only employment under the Real Estate Industry Award 2010, and coverage of the vehicle relocation industry under the Road Transport and Distribution Award 2010.

Plain language drafting

Producing awards in plain language aims to remove ambiguity and make awards simpler and easier to understand—an employer or employee should be able to read an award without needing a history lesson or paid advocate to interpret how it is to apply in the workplace.

The Commission prepared plain language drafts of award-specific clauses in modern awards in 2017–18, as well as continuing to redraft the Pharmacy Industry Award 2010. This process began in 2015–16, when the Commission conducted a pilot to create a plain language draft of the award, including using a plain language drafting expert and incorporating feedback from industrial parties and users. In 2017–18, the Commission produced a number of revised exposure drafts, statements and decisions narrowing the outstanding issues.

The first tranche of plain language drafting covers the Clerks—Private Sector Award 2010, the Hospitality Industry (General) Award 2010, the Restaurant Industry Award 2010, and the General Retail Industry Award 2010. These awards were selected due to high levels of award reliance in the industries or occupations they cover, particularly among small businesses. Exposure drafts have been published for each of the awards and consultation is ongoing.

The second tranche, which covers 10 awards, commenced in 2017–18 with the redrafting of the Cleaning Services Award 2010 and the Security Services Award 2010. The redrafting of the Fast Food Industry Award 2010 and the Hair and Beauty Industry Award 2010 will commence in 2018–19. The plain language drafting of the remaining six awards will be considered when substantive award-specific claims have been dealt with.

The Commission will apply plain language drafting principles to new award provisions that may arise from common issues and to a number of standard clauses found in all awards.

Common issues

The Commission has identified 17 common issues across modern awards. They comprise the 13 issues listed in the 2015–16 Annual Report, three issues listed in the 2016–17 Annual Report, and one additional common issue identified in 2017–18—overtime for casuals.

Significant events occurred in relation to the following common issues in 2017–18:

  • abandonment of employment—In January 2018, the Commission published a decision determining that the ‘abandonment of employment’ provisions in six modern awards were not terms permitted or required to be included in a modern award. The Commission sought submissions from interested parties about the type of provision that might replace those terms.
  • casual and part-time employment—In July 2017, the Commission published a decision proposing a model for a casual conversion clause. The decision also expressed a provisional view that a two-hour minimum engagement period should be included in modern awards that do not currently contain a minimum engagement period, and dealt with a number of award-specific claims. A further decision was issued in November 2017 dealing with whether further hearings were required.
  • family and domestic violence—The Commission determined that all employees (including casuals) should be entitled to five days of unpaid leave in the event that an employee needs to deal with the impact of family and domestic violence and it is impractical for them to do so outside their ordinary hours of work. A model term was published for comment in May 2018. The new entitlement will be incorporated into all modern awards in the first quarter of 2018–19. Read a case study of the decision.
  • family friendly working arrangements—The Commission rejected the Australian Council of Trade Unions’ claim for a right to access flexible working arrangements and a right to revert to former working hours. In March 2017, the Commission published a provisional model term, building on the existing right of an employee to request flexible working arrangements. It is expected that this matter will be finalised in the first quarter of 2018–19.
  • blood donor leave—The Commission published a decision rejecting the claim to include an entitlement to paid blood donor leave in modern awards. Consideration of this matter is now complete.

The Social, Community, Home Care and Disability Services Industry Award 2010 was amended in response to the introduction of the National Disability Insurance Scheme (NDIS). The award was amended to clarify that a part-time work arrangement agreed between an employer and employee does not necessarily have to provide for the same guaranteed number of hours in each week. This provides the stability and predictability desired by the part-time employee, whilst allowing the part-time arrangement to meet the service requirements of particular NDIS plans.

Case study—leave to deal with family and domestic violence

As part of the 4 yearly review of modern awards, a Full Bench considered, and ultimately rejected, an application to create a new entitlement to 10 days of paid leave for employees experiencing family and domestic violence. While paid leave is not necessary as part of a fair and relevant safety net of terms and conditions, the Full Bench found that all employees are entitled to five days of unpaid leave each year.

Family and domestic violence is a community issue that requires a community response. The Full Bench found that:

  • family and domestic violence has a significant adverse impact on those who experience it
  • while men can, and do, experience family and domestic violence, such violence is a gendered phenomenon that disproportionately affects women
  • the effects of family and domestic violence are far reaching and extend beyond the individual directly affected, to their families and the general community
  • family and domestic violence has a real and tangible impact on employees and employers in the workplace
  • employees who experience family and domestic violence often face financial difficulties as a result, such as relocation costs or becoming a sole parent; and may suffer economic harm as a result of disruption to workplace participation.

The Full Bench concluded that all award covered employees should be entitled to five days unpaid leave to deal with family and domestic violence. Unpaid leave:

  • will be available in full at the start of each 12-month period
  • will not accumulate from year to year
  • will be available in full to part-time and casual employees (and will not be pro-rated).

Having consulted with interested parties about drafting the new provision, the Commission is currently finalising the clause that will be inserted into all modern awards. It will require employees to provide notice when taking leave and will specify the evidence an employer might require. Employers will be required to keep information about leave confidential.

You can read the decision at [2018] FWCFB 1691.

Case study—application for equal remuneration for long day care and preschool workers

Three unions applied for an equal remuneration order for employees who work in long day care centres or preschools. The employees are covered by the Children’s Services Award 2010, Educational Services (Teachers) Award 2010 and Educational Services (Schools) General Staff Award 2010.

Under s.302 of the Fair Work Act, the Commission may make an equal remuneration order to ensure that men and women workers receive equal remuneration for work of equal or comparable value.

The Commission can only grant an order if the two groups:

  • perform work of equal or comparable value
  • are of the opposite gender, and
  • are unequally remunerated.

A Full Bench dismissed the application after finding that there was insufficient evidence presented to support the claim.

You can read the decisions at [2017] FWCFB 2690 and [2018] FWCFB 177.

Enterprise instruments

Enterprise instruments are former federal or state awards that covered employees in a single enterprise or a group of related enterprises.

On 31 December 2013, all enterprise instruments terminated unless an application had been made to modernise them.

The Commission received 141 applications to modernise enterprise instruments. Of those matters, one is outstanding. Finalisation of the last matter depends on the outcomes of other matters that are being dealt with as part of the 4 yearly review of modern awards.

State reference public sector transitional awards

State reference public sector transitional awards applied to public sector employees in Victoria and some local government employees in Tasmania. The Fair Work Act requires the Commission to modernise these awards if no application was made to terminate or modernise them by 31 December 2013. There are currently eight state reference public sector modern awards.