The Government is encouraging employers to make enterprise agreements.
But you need to consider that this might not be the best option to tailor award conditions to suit your workplace. You do have other options available to you.
They are:
- Using annualised salary provisions. Some modern awards allow you to package out award conditions in the salary you pay employees. For example, clause 14.1 of the Banking, Finance and Insurance Award entitles you to pay an employee an annual salary which incorporates award obligations like minimum weekly wages, allowances, overtime and penalty rates and annual leave loading. The employee’s agreement is not required; you simply advise the employee in writing of what their annual salary will be and which provisions of the award will be satisfied by the annual salary.
- Inserting set-off provisions in employment contracts. You can include provisions in employment contracts that allow you to set-off over-award payments against award entitlements. However, you will need the employee’s agreement to this provision and you will also need to keep proper records so you can prove that the award obligations are being satisfied.
- Making award flexibility agreements. Modern awards permit written agreements to be made with existing employees to allow over-award payments to replace award obligations to pay overtime rates, penalty rates, allowances and leave loading. A key disadvantage is that entering into an award flexibility agreement cannot be a condition of employment for new employees. Also, employees can terminate award flexibility agreements by giving 4 weeks’ notice.
- Giving guarantees of earnings. Employees and employers can agree to contract out of awards if you promise to pay them more than $108,300 per annum for a specified period. These undertakings must be in writing and signed on behalf of the employer. Employees must agree to accept the undertaking, which is usually designated by their signature (although signing is not mandatory).
Regards,
Charles Power
Editor-in-Chief
Employment Law Practical Handbook
Tags: award flexibility agreements, employment contracts, enterprise agreements, modern awards
