The Law Handbook 2024

Chapter 11.5: Employment contracts, awards and agreements 1057 Redundancy pay Employee’s period of continuous service with the employer on termination Redundancy pay period At least 1 year but less than 2 years 4 weeks At least 2 years but less than 3 years 6 weeks At least 3 years but less than 4 years 7 weeks At least 4 years but less than 5 years 8 weeks At least 5 years but less than 6 years 10 weeks At least 6 years but less than 7 years 11 weeks At least 7 years but less than 8 years 13 weeks At least 8 years but less than 9 years 14 weeks At least 9 years but less than 10 years 16 weeks At least 10 years 12 weeks Awards: The Fair Work Act and modern awards What are awards? Awards have a central role in the industrial relations system under the FW Act. An ‘award’ is an enforceable document that provides a safety net of minimum terms and conditions of employment, along with the NES (see ‘National Employment Standards’, above). In general, an award applies to employees in a particular industry or occupation. Awards are also used as a reference instrument to decide whether an enterprise agreement passes the ‘no disadvantage test’ (used before 1 July 2009) and the ‘better off overall test’ (used after 1 July 2009). A breach of an award can lead to prosecution by authorities in addition to potential civil action. Old awards From 1 January 2010, new modern awards and the NES replaced the old awards. The old awards no longer operate or apply to any employee, except when the old awards are used as a historical reference or are expressly, or by deeming, incorporated into modern awards or enterprise agreements. Modern awards have reduced the overall number of awards by combining the coverage of a number of awards into one award. Modern awards and high-income earners Modern awards do not apply to employees on high incomes. The FW Act defines a high-income earner as an employee who has a written guaranteed income, accepted by the employee, of greater value than the amount set by regulations. As at 1 July 2023, the amount set by the regulations is $167 500 for full- time workers. Note that employees are not excluded solely because of the level of their income; they must also have a written and accepted guarantee of a specified annual income, and notification that the modern award will no longer apply to them, to be excluded from award coverage ( see ss 47(2), 329–333 FW Act). The 10 minimum standards Modern awards can contain 10 minimum standards in addition to the NES (s 139 FW Act). These minimum standards are: 1 minimum wages, including skill-based classification; 2 type of employment; 3 arrangement of work, including hours, rosters, consultation about changes to rosters and breaks; 4 overtime rates of pay; 5 penalty rates, including for shift, weekend and public holidays; 6 annualised wage and salary arrangements; 7 allowances, including for expenses incurred, additional skills, responsibilities or disabilities; 8 leave, leave loading and arrangements for leave; 9 superannuation; and 10 procedures for consultation, representation and dispute settlement. Flexibility terms Modern awards must include a flexibility term. A flexibility term helps an employer and employee to reach an arrangement to vary the effect of particular terms of an award to meet the genuine requirements of the parties. An employee must be better off overall on the flexibility arrangement than under the terms of the relevant award. The flexibility arrangement must be in writing and signed by each party.