Last week, I promised to show you the alternatives to making an enterprise agreement under the Fair Work Act.
And there a quite a few options available to you…

Today, I’ll start by showing you 3 ways you can make modern awards better suit the needs of your business when they are introduced on 1 January 2010.

1. Make an Individual Transitional Employment Agreement (ITEA)

In early March 2008, ITEAs replaced AWAs as a form of statutory agreement that can be made with individual employees until 31 December 2009. By making an ITEA, you can avoid a modern award applying to your employees altogether (although the ITEA cannot provide for a base rate of pay less than the relevant modern award rate!).

If you employed someone under an AWA as at 1 December 2007, then you can make an ITEA with new employees (or with existing employees on AWAs). If you do make an ITEA, it cannot have a nominal expiry date beyond 31 December 2009 but it will continue to apply after this date unless it is terminated or replaced. The ITEA will operate subject to the National Employment Standards (NES).

Remember: This option will only be available to you until 31 December 2009! You cannot make an ITEA after this date.

2. Make an award flexibility agreement

Modern awards will allow for you to make individual written arrangements – known as award flexibility agreements – with existing employees. These agreements will enable you to agree to change the way an award applies to an employee’s employment.

For example, award flexibility agreements will enable you to pay an employee more than the award rate of pay in exchange for not having to pay loadings, allowances, penalties and overtime payments that are payable under the award. Such agreements may be terminated by either party with 4 weeks’ notice (in writing).

Remember: An award flexibility agreement must result in the individual employee’s terms and conditions of employment being better off overall.

3. Make an earnings guarantee

If you make a written guarantee with an employee to pay them more than $108,300 per annum (adjusted for indexation at 1 July each year) and the employee accepts it, you can prevent a modern award from applying to their employment.

An earnings guarantee must:

• state that the award will not apply to the employee while they are subject to the guarantee; and
• be signed by the employee. The employee must sign the guarantee within 14 days of commencing employment (or within 14 days of their terms and conditions of employment being varied).

Remember: While an earnings guarantee is in operation, modern awards will not apply to the employee. But the National Employment Standards and unfair dismissal laws will still be applicable!

Next week, I’ll show you options for more flexible application of NES to your business.

For more details on how you can make sure your business is prepared for all the Fair Work Act changes, take a 14 day FREE trial of the Employment Law Practical Handbook. Click here to find out more!

Regards,

Charles Power
Editor-in-Chief
Employment Law Practical Handbook

Tags: enterprise agreement, fair work act, Individual Transitional Employment Agreement, modern awards, National Employment Standards