Transition provisions and new employers commencing business after 27/03/06

Q&A

Transition provisions and new employers commencing business after 27/03/06

Complexities relating to transitioning to the modern award system can be further complicated when the employer in issue commenced business after the WorkChoices legislation commenced on 26 March 2006.

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Complexities relating to transitioning to the modern award system can be further complicated when the employer in issue commenced business after the WorkChoices legislation commenced on 26 March 2006.
 
The Q&A below illustrates this point in relation to apparently competing industrial instruments.
 
We are a child care centre operating in New South Wales and unsure as to the correct wage rates, casual loading and monetary allowances payable under the transitional provisions of the modern award (the Children’s Services Award 2010).
 
Our centre commenced operating in August 2008 and has been paying employees under the previous NSW NAPSA.
 
The wage rates under the NAPSA are higher (in most instances) than the modern award.
 
The casual loading under the NSW NAPSA was 15% (with an additional one-twelfth pro rata holiday pay amount); whereas, the casual loading under the modern award is 25%.
 
The respective monetary allowances in the two instruments also vary markedly.
 
Which of the two instruments are we now required to apply to our staff?
 
The wage rates and casual loading of the previous state award did not form part of the NAPSA on 27 March 2006, but were incorporated into the Australian Pay and Classification Scales (APCS).
 
An employer whose business commenced operating after 27 March 2006 would have been required to pay the wage rates and casual loading under the relevant APCS — with other conditions of employment such as annual leave and personal/carer’s leave being subject to the Australian Fair Pay & Conditions Standard.
 
Casual loading
 
The wage rates and casual loading provided under the APCS would be subject to the transitional provisions under the modern award. For example, in the case of the casual loading, from first pay period on or after (fppooa) 1 July 2010, the ‘transitional casual loading’ would be 17%. This figure is obtained by using the following formula: 
25% – 15% = 10% transitional gap
 
25% – 80% of transitional amount (10%) = 8%
thus, the transitional casual loading is:
25% – 8% = 17%
In the case of New South Wales, an additional one-twelfth pro rata holiday pay amount applied to casual employees employed prior to 27 March 2006 and was included in the casual loading under the APCS.
 
However, the one-twelfth amount only applied to those employees employed under a NAPSA (ie where the employer’s business existed prior to 27 March 2006), and is not considered part of the casual loading for the purposes of the APCS for any business that commenced after 27 March 2006.
 
Each classification and its wage rate under the modern award would need to be compared to the APCS to establish the transitional amount on which the phasing in percentage is applied, either up or down.
 
Monetary allowances
 
Because monetary allowances (other than industry allowances) did not form part of the APCS, from 1 January 2010 (commencement date of the modern award), the appropriate monetary allowances are those prescribed by the Children’s Services Award 2010.
 
Source: Paul Munro, IR Consultant.
 
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