Ignorance of new IR laws may cost employers, warns legal expert

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Ignorance of new IR laws may cost employers, warns legal expert

Ignorance of Labor’s new IR laws may be costly for employers, particularly over modern awards, a senior workplace lawyer has warned.

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Ignorance of Labor’s new IR laws may be costly for employers, particularly over modern awards, a senior workplace lawyer has warned.
 
Shana Schreier-Joffe, Partner at Harmers Workplace Lawyers, said the impending changes to the industrial relations legislation may catch unprepared employers by surprise.
 
Schreier-Joffe said most of the new laws come into operation on 1 July this year, but the NES and modern awards do not begin until 1 January 2010.
 
Significant consequences
 
She said employers may face significant consequences for failing to apply the appropriate award terms.
 
Schreier-Joffe warned that from 1 January 2010, employers could potentially face higher operating costs due to an increase in entitlements provided under modern awards.
 
For instance, many modern awards will provide for loadings for part-time employees, and the casual loading for a number of industries will be increased to 25%.
 
'In the dark over award modernisation'
 
‘Employers are very much in the dark over award modernisation, especially those sectors that have traditionally not been subject to award coverage, which will now be covered by modern awards,’ she said.
 
‘Employers need to make a thorough assessment of which modern awards will apply to them, and plan accordingly.’
 
Schreier-Joffe said employers should be particularly mindful that all modern awards are required to contain a model flexibility clause.
 
Flexible arrangements
 
This clause can be used by employers to develop flexible arrangements with individual employees that differ from the requirements under modern awards.
 
'However, given the existence of these flexibility provisions, the traditional use of common law contracts which provide for above award payments may no longer insulate employers from award obligations to pay penalty, overtime and loadings,’ she said.
 
Schreier-Joffe pointed out that employers who currently provide an annual salary amount that includes, for example, leaving loading, may no longer be able to do so without using the flexibility clause and process contained in the modern award.
 
Increased costs for casuals
 
She said modern awards may also result in an increase in costs for employers particularly in industries that employ a large number of casuals, such as retail and hospitality.
 
For example, a restaurant in Queensland may be currently paying a casual loading rate of 20%. Under the new modern award that will apply to the hospitality industry, restaurants are required to pay a casual loading of 25%.
 
‘This increase has the potential to cause costs to increase as well as raise issues of compliance,’ she said.
 
FWA ‘more vigilant’
 
Schreier-Joffe said that the new authority charged with ensuring compliance with the system, Fair Work Australia (FWA), will be eager to ensure the new modern awards system is being complied with and it is likely that FWA will be more vigilant in pursuing employees for non-compliance with these awards.
 
‘In order for employers to understand the impact modern awards will have on this organisation and to mitigate the risks of possible non-compliance, a thorough audit of the terms of a modern award in tandem with an assessment of the needs of the business should be conducted,’ she said.
 
Practical advice
 
Schreier-Joffe said that employers, when contemplating the effects of the award modernisation process, should carefully consider the following factors:
  • Employers should make an assessment of which modern awards will apply to them. It may be the case that employers who have traditionally not been subject to award coverage will now be covered by modern awards (for example, currently, employees who perform work in call centres in New South Wales have been award-free, which will not be the case in the future).
  • Employers should consider whether the specific demographics of their workplace make the terms of modern awards particularly onerous.
  • Employers who have a workforce that is required to work after-hours and on weekends and have traditionally used contractual arrangements to pay above award rates of remuneration may no longer be able to do so outside of the model flexibility mechanisms; as such, they may face increased labour costs.
  • Employers should also consider whether there are any particular workplace traits that will make the use of the model flexibility clause a difficult proposition in their workplace.
  • If it appears that modern awards will not be a suitable form of industrial regulation for their workplace, employers should consider mechanisms to ‘insulate’ themselves from the force of modern awards, such as a collective agreement.

 

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