March 2021


Planned changes to enterprise agreements abandoned

Last month we outlined a number of proposed ER changes on the horizon for 2021, which included plans aimed at simplifying the enterprise agreement making and approval process. The Morrison government has now abandoned plans to allow more scope for enterprise agreements that fail the better off overall test.

The proposed changes would have allowed the Fair Work Commission to greenlight enterprise agreements that did not meet the better off overall test if coronavirus impact could be shown.

We will continue to keep you updated as other aspects of the proposed Bill remain up for discussion with unions and employer groups continuing to dispute the benefits or otherwise of the proposed changes.

No Sweeping Power to require COVID Vaccinations

With COVID-19 vaccinations underway in NSW, with the first cohort of vaccinations being given to hotel quarantine workers and those on the frontline, the question still remains whether public health orders may be made for mandatory vaccinations in certain high-risk industries such as aged care. Gladys Berejiklian has reiterated her stance on not making the vaccine mandatory but said “incentives” would be in place, particularly around air travel and hospitality to encourage people to get the jab.

Meanwhile, IR Minister Christian Porter has advised that the “overwhelming majority” of employers should assume they have no power to force employees to vaccinate against COVID-19. The latest guidance from the  FWO and  Safe Work Australia, developed after a series of roundtable meetings with employers and unions, reinforces the Government’s broader inoculation policy, which supports voluntary vaccination.

Reconciliation required for Annualised Wage Arrangements

In February 2020, CCER advised of new rules that applied to annualised wage arrangements following a number of variations to modern awards.

These new provisions contained an optional mechanism for an employer to pay a full-time employee an annual salary. The ability still remained to pay an annual salary via another mechanism, such as through a clause in a contract which states an employee will be paid by way of annual salary.

Employers who chose to implement an annualised wage arrangement in reliance on a modern award clause now have an obligation to perform a salary “reconciliation” after 12 months of employment. From 1 March 2020, the new model clauses required employers to meet detailed record-keeping requirements, notify employees of their maximum ordinary hours and pay for excess hours worked in a pay or roster cycle. In addition, employers would need to undertake an annual comparison against award entitlements to ensure that employees are not underpaid when placed on annualised wage arrangements.

The main advantages of paying an annual salary in reliance on an award provision are:

  • Employee entitlements can be averaged over a year. There is no issue if an employee is “underpaid” in month 1, so long as over the year as a whole they are paid sufficiently.
  • If an employee is underpaid in a year overall (because the reconciliation shows 12 months of entitlements were less than the salary paid) the employer has done nothing wrong, so long as this is put right within 14 days.
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