Changes to Awards in 2020

The Fair Work Commission has announced changes to awards in 2020, with 43 awards already rolled out as part of its review process.

In accordance with section 156 of the Fair Work Act 2009, the Fair Work Commission (FWC) has the obligation to review all modern awards every 4 years.

On 12 December 2018 the section of the Act covering the 4 yearly review was repealed by the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 (Repeal Act). This means that there will not be any more 4 yearly reviews of modern awards and instead, reviews will be conducted on an “as-needs basis”.

The FWC has committed to complete the current review and in September 2019, the Commission confirmed that they are finalising this final review.

To date, 43 new awards have been rolled out, with the next tranche of 27 awards expected to start on 4 May 2020.

For most awards, the biggest change is to layout and language, with the intent that awards are simpler to read and understand. Rules and entitlements in awards are unlikely to change significantly. One exception to this is in relation to the payment of annualised salaries to award-covered employees.

From 1 March 2020, employers electing to pay annualised salaries to employees covered by certain modern awards must comply with new FWC documentation, record-keeping and remuneration reconciliation requirements.

The new requirements include documenting how the annualised salary amount has been calculated, defining an “outer limit” of ordinary and overtime hours, keeping detailed records of start, break and finishing times for each employee and conducting a review of the salary arrangement every 12 months.

Employers paying annualised salaries in accordance with impacted awards will need to ensure they have systems and process in place prior to 1 March 2020 to address the FWC changes. Employers who fail to comply may risk underpayment claims from employees and associated civil penalties for breaching a modern award. Penalties for a single breach of the Fair Work Act may be up to $63,000 per contravention for a company and $12,600 per contravention for individuals.

We’ve written about annualised salary obligation previously.  Our last update from February 2020 on this topic is available here.

Employers with employees covered under any award need to make sure an updated copy of the award (or awards if more than one applies to the business) is available to their staff on a noticeboard or through accessible electronic means. Employers can also subscribe to the email updates from the Fair Work Ombudsman where you’ll be provided information on when your particular award is changing.

Need a simple lesson on awards and how these apply to your business? Bare Bones Consulting specialises in making all things HR easy for you. We can show you what you need to know about the recent changes to awards without bombarding you with information or overcomplicating things. And how good would something simple be right now?