The Fair Work (Pay Protection) Bill 2017 (Cth) makes several amendments to the Fair Work Act 2009 that, if passed, will have serious implications for employers using Enterprise Agreements approved after 1 January 2010.
We are preparing a submission to the Fair Work Commission on the proposed changes. If you currently use an Enterprise Agreement, or have used one in the past, we would greatly appreciate your opinion.
Background
- Section 206 of the FW Act states that the ‘base rate of pay’ in an enterprise agreement must not be less than the base rate of pay payable under an applicable modern award.
- The ‘base rate of pay’ is the rate of pay payable for ordinary hours of work but does not include incentive-based payments, bonuses, loadings, monetary allowances, overtime or penalty rates, and any other separately identifiable amounts.
- Often these additional entitlements are the subject of enterprise bargaining.
- Currently, there is no statutory requirement that these entitlements not be less than the rates payable under an applicable modern award (albeit enterprise agreements of course need to pass the better off overall test).
Implications
- The Bill proposes to change the wording in section 206 from ‘base rate of pay’ to ‘full rate of pay’.
- The meaning of ‘full rate of pay’ includes incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates, and any other separately identifiable amounts.
- The effect of this change would mean that the ‘full rate of pay’ under an enterprise agreement cannot, at any point, fall below the ‘full rate of pay’ due under a modern award.
- This will mean that the penalty rate for weekend work under an enterprise agreement cannot be less than the rate of pay due under a modern award.
Example
Greg is an employer covered by the Greg’s Goods Pty Ltd Enterprise Agreement 2013. In ensuring that the base rate of pay does not fall below an applicable modern award, Greg has increased his base rate of pay each year in line with the General Retail Industry Award 2010. He pays his full time and part time employees a 150% penalty rate on Sundays as outlined in his agreement. If this amendment is passed, Greg can no longer pay the agreement rate and must at least pay the 200% penalty rate in the Modern Award.
This Bill will have serious implications for retailers which operate under an enterprise agreement which offsets higher base rates for lower weekend penalties rates or a lower casual loading.
If you currently use an Enterprise Agreement, or have used one in the past, we would greatly appreciate if you could share your opinion on the these changes by completing a short 2 minute survey.
Survey closes 6pm Monday 24 April.
If you have any questions, please do not hesitate to contact us at law@nra.net.au or call 1800 RETAIL (1800 738 245).