Managerial employees — modern award coverage and employment entitlements

Analysis

Managerial employees — modern award coverage and employment entitlements

The coverage of the Miscellaneous Award and an explanation of the term ‘managerial employee’ are important elements involved in the issue of which managerial employees are award covered.

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The coverage of the Miscellaneous Award and an explanation of the term ‘managerial employee’ are important elements involved in the issue of which managerial employees are award covered.
 
With the coverage of the Miscellaneous Award now clarified by the Australian Industrial Relations Commission (AIRC) in its decision on Stage 4 modern awards , the situation with employment entitlements for award/agreement-free employees has become clearer.
 
Although the Miscellaneous Award does not cover managerial employees, the type of duties that constitute managerial responsibility may continue to create some uncertainty for employers under the new modern award system.
 
Some employers may be of the view that promoting an employee to ‘staff’ or ‘salary’ status, or changing the job title to include ‘manager’ means the employee will become award free. This is not necessarily the case.
 
Miscellaneous Award — coverage
 
Under cl 4.2, the Award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology.
 
Historically, managerial employees have never been automatically subject to award entitlements and this will continue to be the case, however, there has always been conjecture as to what duties are managerial within an organisation. Although the Miscellaneous Award excludes managerial employees from its coverage it does not clarify or define exactly what duties or levels of responsibility are considered ‘managerial’.
 
It is important for the employer to identify the types of duties and responsibilities that are generally regarded as ‘managerial’ in both their nature and seniority, otherwise the conditions of a modern award will automatically apply. This could involve coverage under the Miscellaneous Award or, particularly in administrative roles, the Clerks — Private Sector Award 2010, with a potential entitlement to provisions such as overtime, weekend and public holiday penalty rates, and monetary allowances.
 
Leading hands, etc
 
Employees who may be considered part of a management structure within an organisation, such as ‘leading hands’ or ‘forepersons/supervisors’, will continue to be covered by the relevant industry modern award, or the Miscellaneous Award in the absence of a specific classification in the industry modern award as these roles have traditionally been covered by an award.
 
Who is a managerial employee?
 
The use of the term ‘manager’ in a job title may not accurately reflect the duties and responsibilities involved in the employee’s role and does not automatically grant the employee award free status. This is particularly so in clerical, retail and sales-related occupations where the employee may be on the fringe of executive functions, particularly where such work is part of a career path that may ultimately result in the employee’s promotion to executive management within the company.
 
Test
 
The appropriate test to determine award coverage does not hinge on the title given the employee’s position, but the actual nature of the work performed by the employee for the major and substantial part of the time. Industrial tribunals have previously determined that management duties usually include the authority to bind the company to contracts; the authority to recruit and terminate employees; the authority to set budgetary targets for their designated area; or otherwise participate in the policy direction within their area of responsibility, although these factors are not exhaustive.
 
Where the primary purpose or the major and substantial function of the role is the exercise of skills of a professional, quasi-professional or the exercise of managerial responsibility, the Miscellaneous Award, or any other modern award, would not apply, even though the role may involve various administrative office functions.
 
Employers should perform an audit of the duties and responsibilities of employees who are considered to be part of management to ensure they are in fact award free.
 
Statutory entitlements — award-free employees
 
National Employment Standards (NES)
 
The minimum conditions of the NES apply to all employees employed by a national system employer, including award/agreement-free employees.
 
The NES, however, also allows an employer and an award/agreement-free employee to agree to vary certain provisions, which relate to the agreed ordinary hours of work and the cashing out and taking of paid annual leave.
 
The Regulations also allow an employer and an award/agreement-free employee to agree to taking extra annual leave and/or personal carer’s leave in exchange for forgoing an equivalent amount of pay.
 
Unfair dismissal
 
An employee who is not covered by a modern award or enterprise agreement whose annual rate of earnings exceeds the high income threshold, currently $108,300 pa, is exempt from making a claim for unfair dismissal. This means that an employee covered by a modern award still has access to unfair dismissal laws regardless of the level of an employee’s annual salary.
 
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