The curtain falls on modern award transitional provisions

From 1 January 2010, thousands of state and federal awards were subsumed into 122 modern awards as part of an award simplification process. To allow employers and employees time to adjust, many modern awards contained transitional provisions, allowing employers to phase-in new modern award entitlements over a period of time, including payments in relation to minimum wages, piece work rates, casual or part-time loadings, shift allowances and penalties payable for work done on Saturday, Sunday and public holidays. There were also transitional provisions in relation to accident make-up pay, district allowances, and higher redundancy pay.

These transitional provisions contained sunset clauses which outlined that certain transitional arrangements expired on 31 July 2014 and others on 31 December 2014.

Late last year the Australian Council of Trade Unions (ACTU) made an application to the Fair Work Commission (FWC) to extend the operation of the transitional provisions in relation to accident make-up pay and district allowances, however the FWC refused the extension request.

Accident Make-up Pay

The entitlement to a workers compensation payment is a state-based entitlement, with each state having different entitlements which apply to workers claiming workers compensation. All workers compensation schemes reduce the level of weekly payments that an employee would be entitled to when compared to the employee’s normal wage.

A pre-modern award accident make-up pay provision requires the employer to pay the employee the difference between what the employee receives from the workers compensation insurer and what the employee would be entitled to receive as ordinary pay.

The award modernisation decision of the Full Bench of the FWC in 2008 anticipated that by 31 December 2014, a national standard would have been formulated to apply to accident pay arrangements for all award-covered employees. However that has not occurred.

The consequence of the recent FWC decision is that any award entitlement to accident pay no longer exists as from 31 December 2014, except for the Air Pilots Award 2010 and the Black Coal Mining Industry Award 2010, which are the only two modern awards which preserve this entitlement.

However, employers who have negotiated an enterprise agreement with a union or their workforce may have preserved an entitlement to accident make-up pay if it is contained in their enterprise agreement. Employers should check their agreements to see how this will affect their business.

District Allowances

Modern awards also contain district allowances to compensate workers who are required to work in specific remote areas, which were specified in the relevant modern award. These district allowances ceased on 31 December 2014, except in relation to the Building and Construction General Onsite Award 2010 and the Manufacturing and Associated Industries Occupations Award 2010.

Redundancy Pay

A few pre-modern awards contained redundancy provisions which were more beneficial to workers than redundancy entitlements under the National Employment Standards. From 31 December 2014, those more beneficial redundancy entitlements will no longer apply, and any employee who is made redundant from 1 January 2015 will be entitled to redundancy pay in accordance with the National Employment Standards.

Download a PDF version of this article: The curtain falls on modern award transitional provisions

For more information, please contact:

Rohan Kux
Senior Associate
03 9611 0107