Does casual loading in agreement breach award?

Q&A

Does casual loading in agreement breach award?

What happens if the casual loading in an employer's enterprise agreement is less than that prescribed in the applicable modern award?

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Has a casual employee been underpaid if the loading in an enterprise agreement is less than what is prescribed in the applicable modern award?

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Q Our company has an enterprise agreement that has passed its nominal expiry date. We intend to start bargaining for a new agreement early next year. Management has raised a potential underpayment problem in the current enterprise agreement.

The agreement provides a casual loading of 23 per cent, which was the relevant transitional provision in the applicable modern award at the time the agreement was approved by (then) Fair Work Australia. The modern award that would apply in the absence of the agreement prescribes a 25 per cent loading.
 
It is our understanding the minimum wage prescribed by the applicable modern award overrides the wage rate in the enterprise agreement where there is an inconsistency. Our concern is the company potentially has been underpaying the wages of all our casual employees over the past couple of years.

Does the casual loading prescribed by the relevant modern award override the casual loading in the agreement because it is considered part of the award wage?
 
A The answer is no. The only provision of a modern award that may override an enterprise agreement (where the agreement is inconsistent with the modern award) is the minimum wage rate for the relevant classification covering the employee. The minimum wage rate does NOT include the casual loading under the award or any other payments, such as work-related allowances. The casual loading under the enterprise agreement will continue to apply until the agreement is terminated or replaced.
 
The proposed enterprise agreement will be required to pass the better off overall test, where the casual loading would be compared (among other matters) to the current casual loading under the applicable modern award – in this case 25 per cent.

The employment conditions provided under the National Employment Standards override the relevant employment conditions provided in an enterprise agreement, where the agreement is inconsistent with the National Employment Standards.
 

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