122 Modern Awards - a confusing maze for business

Key Points
  • Most non-State Government employees are covered by one of 122 workplace awards
  • Determining which award applies in a workplace can be complex
  • Where a company gets it wrong, Fair work is pursuing and fining employers for award breaches

The Fair Work Ombudsman is vigorously prosecuting employers for breaches of awards and the Federal Court are making orders for very significant civil penalties where breaches are established.

Surely the 122 modern awards that cover most (non-state-government) employees, clearly define which employees/businesses they cover? Otherwise – how would a business know its obligations and employees know their entitlements?
 
For some businesses the question is relatively clear. For example, if a business is operating a GP practice and employs health support staff, then most of them will be covered by either the Health Professionals and Support Services Award 2010 or the Nurses Award 2010. However, there are many businesses where it is not so clear cut. As a result, there are many businesses where they pay their staff under the wrong award.
 
So what?  Well, the Fair Work Ombudsman is vigorously prosecuting employers for breaches of awards and the Federal Court are making orders for very significant civil penalties where those breaches are established.
 
By definition, if you (as an employer) are paying an employee under an incorrect award, – there’s a real risk that you (as the employer) are in breach of the correct award and liable to face a civil penalty.
 
A recent simple example that came before the Federal Circuit Court highlights the confusion so many businesses face.
 
In this case, the business was a start-up providing a novel service out of airports where customers left their cars with the company and those cars were then hired out other people. So… was it a car storage company or a car hire company?   The court held that, it was essentially a hire car business. 
 
The worker who made the claim had been employed as an assistant manager.
 
The worker believed that he was employed under the Clerks Private Sector Award 2010.
 
The employer thought the worker was covered by the, less onerous, Miscellaneous Award 2010. 
 
As it turns out, the Federal Circuit Court decided that they were both wrong. 
 
The Federal Circuit Court came to an entirely different view and decided that, because it was a car hire company, that meant its business was effectively classified as a retail outlet and, therefore, the worker was covered by the General Retail Industry Award 2010.
 
This meant that the worker was entitled to make a claim for overtime and penalty rates.  More concerning for the employer, for each breach (i.e. incidence of underpayment of an entitlement), a civil penalty of up to $63,000 could be imposed by the court upon the employer. 
 
Those penalties – even for a “first offence” – can amount to $100,000+.
 
To avoid the risk of a potentially crippling penalty – employers need to get advice from an expert employer lawyer – to be certain they are meeting their obligations to their workers under the right award.

Post by Warwick Ryan 

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