2014 WAGE DECISION: FWC orders 3% increase in minimum wages

1.5 Million Of Australia’s lowest paid workers will have a pay increase of 3% by July of this year. For a full-time employee working a 38-hour week the increase is $18.70 per week (50 cents per hour) to $640.90 per week, or $16.87 per hour.
 FWC President Justice Iain Ross announced the decision, noting that the increase in super guarantee from 1 July had a moderating impact.

The ACTU had originally asked for a $27 per week, or 4.3% increase but the Federal Government warned that increases that high would lead to a loss of jobs as some businesses would not find this affordable.

Ai Group had proposed a 1.6% or $10 per week increase, with ACCI's proposal even more conservative at 1.3%.
The panel suggested that it would not be as low if the superannuation guarantee rate was not also due to rise in July.

The Fair Work Commission last month ruled to limit Sunday penalty rates for some restaurant and cafe staff from July, expected to save businesses up to $112 million a year.

What this means for you

Modern Awards
Businesses that apply Modern Award rates will have to increase them to comply with the FWC decision. From 1 July 2014 all wage rates and penalties will need to match the applicable Modern Award.

Annualised Salaries and Individual Flexibility Agreements
if your business has utilised Individual Flexibility Agreements, you will have to review those agreements to guarantee employees are still “better off overall” when compared to the increased modern Awards rates.
 Employers who use annualised salary arrangements under Modern Awards should also check the Award requirements.

Enterprise Agreements
if you are currently negotiating an Enterprise Agreement or if you already have one, you should consider the increase to ensure that the rates that are negotiated are enough to pass the Better off Overall Test.
If you have an Enterprise Agreement, you will need to ensure the minimum base rates in the EA remain at least equal to the new Modern Award rates.

Allowances

The Fair Work Commission’s decision will impact allowances as well as base rates. A number of Modern Award allowances are expressed as a percentage of the "standard rate", which is the rate applicable to the trade’s equivalent classification in the award. These allowances will therefore increase in line with the increase in the standard rate. Expense related allowances will increase in line with the relevant CPI index.

High Income Guarantee
the High Income Threshold will also increase from 1 July.  Any employers who avoid Award conditions by using High Income Guarantees to will need to examine their agreed terms to remain compliant and above the new threshold. If guarantee levels fall below the threshold minimum entitlements will revert to those in the Award (including, for example, overtime and penalty rates).

Employers will have to identify and implement any changes promptly to ensure compliance to the Fair Work Commission’s decision.

Proposed changes to the Fair Work Act

The proposed changes to the fair work act the federal government has introduced to parliament could have a significant impact on the existing fair work act if implemented.

To outline how these changes could affect your business, here are some of the main points within the bill and how they could affect your business.

• Extending a period of unpaid parental leave – An employee taking unpaid parental leave under the fair work act, may request to increase their leave for a period up until 12 months. The amendment would require the employer to give the employee the opportunity to discuss the request in person or over the phone before refusing it. The discussion cannot be had by email or sms.

• Payment for unused annual leave – under the Government’s proposed amendment, payment for unused annual leave is to be made at the employee‘s base rate of pay for ordinary hours as applicable immediately before dismissal (unless an applicable modern award, enterprise agreement or employment contract expressly provides for a more beneficial entitlement).  Base rate of pay does not include penalties, loadings, allowances or any other separately identifiable amounts.

• Taking or accruing leave while receiving workers’ compensation - An employee who is absent from work due to workers compensation is unable to take or accrue leave under FW act during the compensation period.

• Transfer of Business -The transfer of business provisions will not apply to the transfer of an employee between associated entities where the employee sought the transfer at their own initiative. The proposed amendments would “switch off” the FW act transfer of business rules when an employee becomes employed by an associated entity of his or her former employer if the employment was sought on the workers own initiative before termination of employment with the old employer.
  
  For example if an employee is looking to progress their career or change their lifestyle and pursues a career opportunity within their own company or affiliated company this would be considered seeking his or her own initiative. If an employee who was made redundant accepted alternative employment this would not be considered his or her own initiative.
  
  Note that this change would only apply to transfer of enterprise agreements and not to continuity of service-based entitlements. The automatic continuity (subject to exceptions) provided in the FW Act when employees transfer between associated entities would continue to apply.

• Fair Work Commission (FWC) hearings and conferences - The proposed amendment would allow the FWD to dismiss an unfair dismissal claim on certain grounds without a hearing. The FWC will be able to do this if the applicant has failed to attend a conference or hearing, comply with a FWC order or discontinue an application after a settlement agreement.
  
  This would also apply where the FWC found the application to be frivolous or had no reasonable chance of being successful. The FWC must invite all parties to provide further information to the FWC to show its use is warranted before exercising this power.

• Individual Flexibility Arrangements - All employees party to an IFA made under a modern award flexibility term would need to sign a 'genuine needs' statement.
  
  Employees entering an independent flexibility arrangement are required to give a written statement indicating why they believe an independent flexibility agreement under a modern award or enterprise agreement meets their needs and leaves them better off.
  
  Individual flexibility arrangements allow for unilateral termination only upon 13 weeks of notice, as opposed to the current 28 days of notice.
  
  The proposed amendments improve the utility of individual flexibility arrangements by requiring enterprise flexibility terms to permit individual flexibility about all five minimum matters listed in the model flexibility term; namely arrangements about when work is performed, overtime rates, penalty rates, allowances and leave loading.

• Greenfields Agreements –The FWA amendment proposes many changes to the Greenfields agreement process intended to avoid employers being convinced to agree to inflated wages and conditions and employment preference to avoid delays in a project. Under the proposed changes, an agreement would provide for pay and conditions consistent with the prevailing standards and conditions within the relevant industry for equivalent work. The FWC may take into account the prevailing pay and conditions in the relevant geographical area.  These changes include the extension of good faith bargaining requirements to single enterprise Greenfields agreements. They also include provisions for an employer to apply to the FWC for an agreement to be approved where the parties are unable to reach agreement in a reasonable period following a three month negotiation period notified by the employer.

• Protected action ballot orders - The Amendment Bill proposes that an application for a protected action ballot order will not be able to made until the employer is obliged to give employees notice of representational rights in bargaining.

• Right of Entry - The amendment bill introduced changes to the right of entry rules regarding the rights of union officials who hold entry permits. The employer will no longer be required to organise transport and accommodation arrangements for permit holders in remote areas.
  
  Interviews with employees by union officials or permit holders must be held in an area agreed between the business and the permit holder or in the place the business employees take lunch breaks. The FWC will also be able to deal with disputes regarding the frequency of visits by permit holders.