Modern awards have covered the majority of Australian workplaces since 1 January 2010. Many of you will recall that the implementation of the modern award system resulted in changes to the minimum terms and conditions for many employees.  In order to provide employers and employees with time to adjust to these changes, most modern awards prescribed a set of transitional arrangements.  Those arrangements essentially specify when particular parts of the modern award come into effect.  Importantly, all of those transitional arrangements will cease to operate from the beginning of the first full pay period on or after 1 July 2014.  What this means is that all parts of the modern award applicable to you will have come into full effect by that date.

Effectively, the transitional arrangements in modern awards phased in any difference between the modern award rate and the rate that applied prior to the commencement of the modern award, over a four year period. The sorts of employee entitlements that have been phased in (and by the beginning of the first full pay period on or after 1 July 2014 will have been fully phased in) are:

  • minimum wage rates (including piecework rates and industry allowances);
  • casual or part time loadings;
  • Saturday, Sunday, public holiday, evening or other penalties; and
  • shift allowances/penalties.

What does this mean for you?

If you pay employees sufficiently in excess of award rates (that is, if you pay them enough that even when the rates are fully transitioned they are earning at least the amount of the fully transitioned rate), the cessation of the transitional arrangements will have very little effect on you and your workplace. If you are not sure whether you pay sufficiently in excess of award rates, you can ask us to check, or you can check for yourself using the Fair Work Ombudsman's Pay Check Plus tool.

If you pay employees strictly in accordance with the modern award rates, you should start reviewing (probably now) what changes you need to make so that employees are receiving entitlements equal to, or in excess of, the minimum award rates on the first full pay period after 1 July 2014. Keep in mind also that the minimum wage rates in the modern awards will increase from the first pay period on or after 1 July 2014 pursuant to the annual wage review.

If you do not prepare for the changes and, as a result, employees do not receive their full entitlements, the Fair Work Ombudsman can become involved. This could result in mediation, investigation, enforcement and/or prosecution - all things which we know you would like to avoid.