05 Nov 2009
Awards under change: award coverage and enterprise awards
Where an enterprise award exists, employers may need to consider whether they wish to retain the enterprise award and, if so, whether to seek its modernisation by Fair Work Australia or whether they should negotiate a new enterprise agreement.
Employers need to be aware of the coverage provisions in modern awards and the scope to modernise enterprise awards. Modernising enterprise awards was not part of the original "Forward with Fairness" policy, but it is now possible under transitional legislation.
Parties and award coverage
The concept of parties or respondents to awards, which existed in the old federal award system under the Workplace Relations Act 1996, will no longer be relevant for modern awards that will operate from 1 January 2010. Modern awards will bind national system employers (which include most corporations, the Commonwealth, a Commonwealth authority, an employer in a territory and an employer in a state which has referred its industrial relations powers to the Commonwealth) and employees by virtue of the coverage clauses in the awards. This means that it will be very important to consider the clauses in modern awards which deal with coverage to determine which employees are covered by those awards. Depending on coverage clauses, employers may need to apply different modern awards to different employees.
Enterprise awards: can now be modernised
Despite the award modernisation process, enterprise awards may remain in existence.
The original intention in the Forward with Fairness Policy was that only industry and occupational awards would be modernised. The award modernisation process commenced last year and is scheduled to conclude by 31 December 2009. However, Fair Work transitional legislation – the Fair Work (Transitional and Consequential Amendments) Act 2009 - has included provision for enterprise awards to be modernised on request.
Employers with enterprise awards will therefore need to consider whether they wish to retain their enterprise award and, if so, whether to modernise the enterprise award or, in the alternative, whether to negotiate a new enterprise agreement.
Application to modernise enterprise awards
Only a person covered by an enterprise award may apply for the award to be modernised.
The application period is limited: applications may be made at any time after 1 July 2009 until the end of 2013.
Who may modernise enterprise awards?
Only a full bench of Fair Work Australia may make a modern enterprise award.
The factors Fair Work Australia must take into account in deciding whether to modernise an enterprise award, and if so what terms to include in the enterprise award, are set out in the transitional legislation. They include:
the circumstances that led to the making of the enterprise award rather than an instrument of more general application;
whether there is a modern award (other than the miscellaneous modern award), or likely to be a modern award, that would cover the persons who are covered by the enterprise award;
the content, or likely content, of that modern award;
the terms and conditions of employment applying in the industry in which the persons covered by the enterprise award operate, and the extent to which the enterprise award provides enterprise-specific terms and conditions of employment;
the likely impact on the persons covered by the enterprise award, of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;
the views of the persons covered by the enterprise award; and
any other matter prescribed by the regulations.
Implications for employers
Employers should seek advice about their award obligations from 1 January 2010, whether they are bound by a modern award or awards and which modern award or awards are applicable to their employees.
Where an enterprise award exists, employers may need to consider whether they wish to retain the enterprise award and, if so, whether to seek its modernisation by Fair Work Australia or whether they should negotiate a new enterprise agreement. These options, and their legal implications and implementation, will need to be carefully considered by employers.
Thanks to Marilyn Pittard for her help in writing this article.