Baker McKenzie special counsel Maria Hurley-Smith explores some of the changes flagged by the Fair Work Commission’s review of modern awards – listen here.
Minimum wages to increase by 3.3%
The Fair Work Commission’s panel for annual wage reviews released its Annual Wage Review 2016-2017 decision on 1 July 2017.
The decision provides that minimum award wages will increase across the board by 3.3% effective 1 July 2017.
This decision will result in the following increases to the Federal minimum wage rates:
- Weekly minimum wage: from $672.70 to $694.90 (increase of $22.20),
- Hourly minimum rate: from $17.70 to $18.29 (increase of 59 cents).
Otherwise, the percentage increase will apply to the minimum rates of pay contained in awards. Increases to minimum weekly wages will be rounded to the nearest 10 cents.
In fixing the increase at 3.3% (up on last years 2.4% increase), the Panel observed that the prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs.
Employers should now start to review their employees’ existing rates of pay to ensure compliance with minimum rates when the above changes commence on 1 July 2017.
A Full Bench of the Fair Work Commission has today announced that penalty rates for Sunday and public holiday work in certain modern awards will be reduced from 1 July 2017.
The awards impacted by the decision are the:
- Fast Food Industry Award 2010 (Fast Food Award);
- General Retail Industry Award 2010 (Retail Award);
- Hospitality Industry (General) Award 2010 (Hospitality Award);
- Pharmacy Industry Award 2010 (Pharmacy Award);
- Registered and Licensed Clubs Award 2010 (Clubs Award); and
- Restaurant Industry Award 2010 (Restaurant Award).
There are some unresolved matters yet to be reviewed. However, significant changes to Sunday and Public Holidays were decided as set out below.
Sunday Penalty Rates
The Full Bench decision will result in the following reductions to the payment of Sunday penalties under the Hospitality, Fast Food, Retail and Pharmacy Awards:
|Award Title||Sunday Penalty Rates|
|Full Time and Part Time employees||175% ↓ 150%|
|No change for casuals|
|Fast Food Award (Level 1 employees only)|
|Full Time and Part Time employees||150% ↓ 125%|
|Casual employees||175% ↓ 150%|
|Full Time and Part Time employees||200% ↓ 150%|
|Casual employees||200% ↓ 175%|
|Pharmacy Award (7am – 9pm only)|
|Full Time and Part Time employees||200% ↓ 150%|
|Casual employees||200% ↓ 175%|
The Full Bench did not propose to change the Sunday penalty rate for level 2 and 3 Fast Food Award employees, and nor was the Full Bench satisfied that any reduction to Sunday penalty rates in the Clubs Award or the Restaurant Award were necessary.
Public Holiday Penalty Rates
The Full Bench decided to reduce the public holiday penalty rates paid in all the awards reviewed except for the Clubs Award (which is subject to further submission).
The effect of the decision in respect of the public holiday penalty rates is set out below:
|Award Title||Public Holiday Penalty Rates %
Full Time and Part Time
|Public Holiday Penalty Rates %
|Hospitality Award||250% ↓ 225%||275% ↓ 250%|
|Restaurant Award||250% ↓ 225%||250%|
|Retail Award||250% ↓ 225%||275-250% ↓ 150%|
|Fast Food Award||250% ↓ 225%||275% ↓ 250%|
|Pharmacy Award||250% ↓ 225%||275% ↓ 250%|
Timing of changes
The Full Bench observed that the decision was likely to reduce the earnings of those employees who currently work on Sundays and would inevitably cause some hardship to those employees affected.
The Full Bench concluded that appropriate transitional arrangements were necessary to mitigate the hardship caused to employees who work on Sundays. Accordingly, the reductions in Sunday penalty rates will take place in a series of annual instalments commencing 1 July 2017 (with interested parties to make submissions to the Fair Work Commission regarding transitional arrangements). The Full Bench indicated that it will likely take at least two years to introduce the proposed changes to penalty rates on a Sunday.
The changes to public holiday penalty rates will take effect on 1 July 2017.
Take away for employers covered by these awards
Given the significant changes to the Sunday and Public Holiday penalty rate provisions in these modern awards, employers covered by these awards should now obtain updated copies of their awards and review varied provisions to ensure that their payroll systems are ready to cope with changes as of 1 July 2017. Employers should otherwise continue to review further updates on matters yet to be decided, including transitional arrangements for changes to Sunday penalty rates.
A recent study undertaken by UTS, QUT and the University of Adelaide reviewed the prevalence of unpaid work placements within the current Australian labour market.
The study, reported in ‘Unpaid Work Experience in Australia: Prevalence, nature and impact‘[i], revealed that almost 60% of respondents aged 18-29 and over 25% of respondents aged 30-64 had participated in at least one episode of unpaid work experience in the last five years with 60% agreeing that an unpaid work placement would be helpful towards securing paid work in the future. However, only 27% of respondents actually secured paid employment by their host employer or organisation after completing an episode of work experience.
The report noted that exposure to the working world through well-designed work experience programs may assist in the transition from education to employment. Federal government initiatives like the National Work Experience Programme and PaTH (Prepare-Trial-Hire), to be introduced in April 2017, are also placing increasing reliance on unpaid work experience in an attempt to address the needs of the long-term unemployed.
However, on the flipside, many arrangements do not fall within permitted “intern” practices under the Fair Work Act 2009 (Cth) (Act), exposing businesses to potential penalty for failure to provide interns with minimum benefits. The Fair Work Ombudsman has successfully prosecuted a number of businesses over unpaid intern schemes, asserting that interns were in fact employees (see previous posts on this topic at Recapping Australian Workplace Regulator Trends for 2016, January 2017 and Unpaid interns leave $24,000 hole in organisation’s pocket, February 2015)
Organisations seeking to allow unpaid work experience must continue to be mindful of restrictions on genuine intern arrangements under the current drafting of the Act.
Unpaid Work Providers beware
Unpaid work placements can be lawful – provided that the arrangement is a “vocational placement” within the meaning of the Act or alternatively, no employment relationship can be said to exist. Under the Act, a vocational placement is lawfully unpaid if:
the placement is either arranged by an educational or training institution or a student;
there is no entitlement under contract, industrial award or agreement for the organisation to pay for the work the student undertakes;
the placement is done as a requirement of the student’s education or training course; and
the placement is approved under a Commonwealth, State or Territory law or administrative arrangement (courses offered at Australian universities, TAFE colleges and schools will generally satisfy this requirement).
If the placement does not meet all of the above criteria, it may still be a lawful unpaid work arrangement provided no employment relationship exists. Unpaid work arrangements are less likely to be considered employment relationships if:
they are mainly for the benefit of the person (not the organisation);
the periods of the placement are relatively short;
the person is not required or expected to do productive work; and
there is no significant commercial gain or value for the organisation derived out of the person’s work.
[i] “Unpaid Work Experience in Australia: Prevalence, nature and impact” by Dr Damian Oliver (UTS), Professor Paula McDonald (QUT), Professor Andrew Stewart and Associate Professor Anne Hewitt (University of Adelaide), Department of Employment, December 2016.