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Small business owners call for simplified and shorter modern awards

Modern AwardsSeptember 29, 2014

Small business owners call for simplified and shorter modern awards (Last Updated On: August 9, 2016)

As part of the four-year review of modern awards, the Fair Work Commission surveyed 47 small business owners for their views on the awards. Unsurprisingly, the response was negative – Modern Awards are convoluted, complex, ambiguous, of questionable relevance and written for the benefit of bureaucrats and lawyers!

The Fair Work Act 2009 started the process of modernising the awards system by consolidating over 1500 awards into 122 modern awards, which cover the majority of employees in Australia. Modern awards set out minimum entitlements and conditions (including wages) for employees covered by them and also aimed to take into account:

  • the need to promote flexible modern work practices and the efficient and productive performance of work;
  • the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
  • the need to ensure a simple, easy to understand, stable and sustainable modern award system.

The survey results clearly show that modern awards don’t meet these objectives.

The small business owners surveyed found awards daunting, difficult to use, complex and challenging and without any consideration for their needs. Language was convoluted, vague and full of legal jargon, requiring expensive legal advice to understand and interpret them – a luxury most small businesses can’t afford.

Owners struggled to identify which award was most relevant to their business and could not understand the application of penalties and other additional payment provisions. These are all common issue raised by our clients as well. An example being the fact many awards contain provisions in various different parts of the award, such as those relating to breaks.

The difficulty in understanding the modern awards resulted in owners paying above the base award rates in the hope that this would cover any additional payments and penalties due under the award, or even looking at contract labour to avoid the issue.

The report highlights the need for simpler rewards using plain language, illustrated examples and having less need for applying formulas and calculations. Whilst the new example draft award produced by the Commission received some positive feedback, business owners still called for a less complicated system.

It is hoped that the Commission takes on board these comments during the current award review and produces user-friendly documents which small business owners can understand. Otherwise, how can the Fair Work Ombudsman justify the imposition of penalties and fines for businesses whose ‘best guess’ is wrong, when the report notes that information which is too hard to deal with is creating the barrier to compliance.

By Joanne Hall – Employment Relations Adviser

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