LexisNexis Practical Guidance®

The system of ‘modern awards’ operating under Pt 2-3 of the Fair Work Act 2009 (Cth) (FW Act) — along with the National Employment Standards (NES) in Pt 2-2 forms the ‘safety net’ of minimum employment conditions for employees covered by the FW Act.

Part 2-3, Division 3 contains provisions setting out terms that are mandatory, permissible and proscribed in modern awards:

• •Mandatory terms include provisions relating to the coverage of modern awards, flexibility clauses and dispute settlement provisions.
• •There is a wide range of permissible terms in modern awards, relating to common terms and conditions of employment such as minimum wages, classifications, types of employment, overtime/penalty rates and leave entitlements.
• •Moderns awards must not include provisions that would breach Pt 3-1 of the FW Act, discriminatory provisions, or terms dealing with various other types of proscribed subject matter.

See Mandatory, permissible and proscribed terms.

As a general rule, modern awards may not contain provisions excluding the NES or any provision of the NES. However, modern awards may include terms that are expressly permitted by Pt 2-2 of the FW Act, as well as terms that are ancillary/supplementary to the operation of the NES.

See Interaction of award terms and the NES.

The process of transition to the workplace relations system established by the Fair Work Act 2009 (Cth) (FW Act) inevitably required complex arrangements for the transitional operation of industrial instruments, including awards, made under previous federal legislation.

These arrangements are principally to be found in the Fair Work (Transitional and Consequential Amendments) Act 2009 (Cth) (Transition Act), and in a number of decisions of the Australian Industrial Relations Commission (AIRC) in the context of the award modernisation process.

As concerns transition of industrial instruments, the Transition Act and the AIRC addressed three principal issues:

• • the continued operation of industrial instruments that had been created, or had their operation continued, under various iterations of the WR Act;
• • the transition process for wage rates under transitional instruments to those laid down in modern awards; and
• • the phasing-in of entitlements under modern awards where they were more (or less) favourable to employees than those which had applied under the WR Act.

The Transition Act provides that all instruments that operated under the WR Act became ‘transitional instruments’ upon the repeal of that Act with effect from 1 July 2009. These instruments are then divided into two further categories:

• •award-based transitional instruments, including federal awards, notional agreements preserving state awards, and Pt 2B state reference transitional awards or common rules (which entered the federal system as a consequence of the referral of legislative powers by the states of New South Wales, Queensland, South Australia and Tasmania); and
• •agreement-based transitional instruments, including collective agreements, Australian workplace agreements, Individual Transitional Employment Agreements, workplace determinations, preserved state agreements (individual and collective), pre-2006 certified agreements, pre-1996 agreements, and s 170MX awards (made under the WR Act before the commencement of the Work Choices amendments in 2006).

Detailed provision concerning the transition of transitional instruments is set out in Sch 3 to the Transition Act (with Div 2B state instruments being dealt with in Sch 3A).

In broad terms, transitional instruments continue to have the same coverage as under the WR Act, and to be subject to the same rules as to content and interaction with other transitional instruments as was formerly the case. They can be enforced under Pt 4-1 of the FW Act, have no effect to the extent that they are detrimental to employees when compared to the National Employment Standards, and are displaced by any modern award or enterprise agreement that covers the same employees as the transitional instrument. Once displaced, a transitional instrument can never again cover the employees concerned.

Many of the same principles apply to the transition of agreement-based transitional instruments and award-based transitional instruments.

See Transitional instruments.

As part of the award modernisation process, the AIRC adopted a set of Model Transitional Provisions which deal with the commencement date for modern awards, and address matters such as transitional arrangements, take-home pay, over-award payments and the Fair Work Commission's (FWC) powers to review transitional arrangements. They are based on the assumption that the transitional provisions ‘should generally provide for phasing-in over a 5 year transitional period’.

See Transition process for modern award wage rates.

The system of ‘modern awards’ operating under Pt 2-3 of the Fair Work Act 2009 (Cth) (FW Act) — along with the National Employment Standards (NES) in Pt 2-2 forms the ‘safety net’ of minimum employment conditions for employees covered by the FW Act.

The Fair Work Commission (FWC) has various (albeit limited) powers under the FW Act, and relevant transitional legislation, to vary or review modern awards. Minimum wage provisions in modern awards are reviewed on an annual basis. There is also a general power to vary or revoke modern awards, or make new awards, but only if this will achieve the ‘modern awards objective’ in s 134 of the FW Act. Modern awards may also be varied to remove ambiguity or uncertainty, to correct an error, or to remove discriminatory content.

See Varying/reviewing modern awards.

Awards applying to specific enterprises (rather than across industries or occupational groupings), known as ‘enterprise instruments’, were not subject to the award modernisation process. Schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transition Act) contains provisions for the termination and modernisation of enterprise instruments into ‘modern enterprise awards’ by the FWC.

See Enterprise awards/instruments.

Schedule 6A of the Transition Act deals with the modernisation of instruments known as ‘State reference public sector transitional awards’ into ‘State reference public sector awards’. These provisions apply only in respect of states that have referred the regulation of public sector employment to the Commonwealth.

See State reference public sector awards.