Last minute change to clerical award could increase costs

The industrial relations umpire Fair Work Australia’s decision to make a major last-minute change to the new modern award covering over one million clerical workers could result in increased labour costs for employers in some states. In a decision released yesterday, Fair Work Australia has decided to scrap an earlier exclusion clause in the Clerks – Private Sector Award that exempted clerks paid at least $851 were exempt from a number of award provisions, including overtime rates.

In its decision, Fair Work Australia said they had been influenced by Workplace Relations Minister Julia Gillard, who wrote to FWA earlier this year and specifically addressed the issue of an exemption within the clerk’s award.

“The Government considers that this award should not seek to exclude basic award conditions for employees who should be protected by a complete and comprehensive safety net, through both modern awards and the National Employment Standards, given that there is not a history of exemption from these provisions in a wide range of awards,” Gillard wrote.

As a compromise for employers, FWA had decided that bosses can pay clerks an annualised salary rather than having to work out a wage based on an hourly rate, so long as the employee is not left worse off than they would be under the award.

Employers will need to review the employee’s salary each year to ensure that the worker is not left worse off.
However, business groups have warned the late changes will increase uncertainty and, in some instances, costs for employers.

The Australian Federation of Employers and Industries said in a submission to the FWA that many employers in New South Wales, Western Australian and Queensland already have exemption clauses in their awards or agreements.

According to the AFEI, two thirds of clerical employees nationally would be covered by awards and agreements with exemption clauses.

AFEI chief executive Garry Black told the Australian Financial Review that these businesses will face high administrative costs as they will be forced to record the actual hours worked by clerical staff to ensure they are not underpaying them by using an annualised salary rate rather than an hourly one.