The award modernisation process is well underway with 44 modern awards completed and corresponding decisions made on 19 December 2008 and 3 April 2009. The entire award modernisation process will complete by 31 December 2009, with the modern awards to come into effect in conjunction with the National Employment Standards on 1 January 2010.

Fair Work Australia

Despite the commencement of Fair Work Australia on 1 July 2009, the current award modernisation process will continue under the auspices of the Australian Industrial Relations Commission (AIRC). Interestingly this means that in the period between 1 July 2009 and 31 December 2009 members will in fact sit on two different statutory tribunals, the Australian Industrial Relations Commission when performing award modernisation duties and Fair Work Australia when performing other statutory duties.


The Commission identified four distinct stages to carry out the award modernisation process. Industry groupings were identified to be dealt with in each of the stages. The 44 awards already made represent those industry sectors that were part of the priority stage (the first stage) and stage two.

As part of Stage 3, the AIRC Full Bench has recently handed down 50 exposure draft awards across 39 industries and occupations and is currently sitting for consultations in relation to each of the exposure drafts. The revised Stage 3 modern awards will be finalised and published by 25 September 2009.

The closing date for lodging written submissions in relation to Stage 4 industry groups is 24 July 2009. Exposure drafts of those awards will be released on 25 September 2009 and the final date for the making of those awards is 4 December 2009.

Transitional arrangements

The 44 awards which have already been made together with the exposure drafts that have been released for the Stage 3 industries indicate widespread and substantial change to award regulation across the whole of the economy.

One of the major drivers of this change is the requirement that modern awards not apply on a state by state basis or on a geographically distinct basis. They must all apply across the nation. This inevitably means that there will be significant changes for those employers who have been reliant upon state awards (now NAPSAs). The legislation recognises this and allows the Commission to put provisions in the modern awards that cushion this impact over a period of up to five years. To that end, the Commission has programmed a timetable to receive submissions from persons affected by awards made in the priority and Stage 2 industries.

Invitations for additional or reply submissions in relation to the transitional provisions for priority and Stage 2 modern awards were also recently closed. The Full Bench sits for supplementary oral submissions in relation to those transitional provisions between 13 to 17 July 2009.

The closing date for lodging written submissions, drafts or other proposals concerning the scope, content and transitional arrangements for Stage 4 awards is 10 July 2009. Clients who are considering lodging written submissions are invited to contact us.

Extensive submissions have been made in this process and a snapshot of key issues raised in those submissions includes:

  • There is a widespread desire for transitional clauses to be formulated which permit ‘off setting’ arrangements. That is, employers that are currently making over award payments be allowed to absorb those over award payments into higher obligations in modern awards.
  • Many submissions address how increased costs should be ‘phased in’; a popular submission made by employers is that where a modern award involves an increase (for example a casual loading moving from 17 per cent to 25 per cent) the employer should be able to phase in that increase over a five-year period by applying 20 per cent of the increase each year.
  • Many union submissions urge that specific transitional clauses should record that no employee can be worse off as a result of the implementation of a modern award. Whilst some employers agree with this proposition, others point to the ability for employees and unions to make applications to Fair Work Australia for ‘take home pay guarantee’ orders under the Transitional Amendment Act.
  • In sectors such as fast food and horticulture, employers are asking for many of the major cost increases imposed by modern awards to be wholly delayed until such time as the two-year review of the awards takes place and the employers can bring more detailed and significant evidence about the nature of those cost increases in the hope that the modern award will be varied before the increases are imposed.

Changes to the award modernisation request

In late May 2009 the Minister's request was amended so that specific directions were given to the AIRC in relation to creating a separate, stand alone modern award for the restaurants and catering sector. The AIRC has programmed a series of steps to achieve that result.

At the current time it is understood that a number of other industries sectors have been in meetings with the Minister seeking similar amendments to the request in order to deal with their particular circumstances.

Enterprise awards

Clients with enterprise awards have the opportunity to apply to the AIRC for modernisation from 1 July 2009, rather than 1 January 2010 as originally designated. Any party to a modern award can apply for modernisation. Enterprise awards which have not been modernised ‘die’ on 31 December 2013.