17 June 2010

Pay rates and modern awards

From 1 January 2010, all private sector employers in Queensland are covered by the national 'Fair Work Australia' system.

Accordingly we now provide various tips to assist with your understanding and implementation of the changes.  This is not a substitute from seeking advice from professionals in the area – but will hopefully draw attention to areas requiring possible action.

As the 122 modern awards have replaced about 1700 federal and state-based awards, the impact of the wages and conditions in modern awards vary between states, industries and employers.  Most modern awards contain transitional provisions which describe how increases and decreases in minimum conditions affecting pay can be steadily phased in. 

From July 2010, pay rates in some Modern Awards are scheduled to start changing under transitional arrangements which will bring all state wages into line over 5 annual instalments.

This means that the amount that you pay your employees will need to be reviewed before the end of June.

How do I work out how much I should pay my staff?

The first step you need to do is establish which modern award your staff are on, the modern awards section on the Fair Work Australia website will assist you in determining the correct award.

Once you have found the award, you need to establish what the minimum wage for the staff member is to be, making any required adjustments. (eg for junior wages).  Then calculate the difference between the current wage and the modern award rate and deduct 80%.  Add this amount to the current wage to get the transitional wage to be paid.  

This will work in reverse if the current wage is higher than the modern award wage, however If the modern award contains lower wages and/or penalty rates, employers should be careful that their employee's overall take-home pay is not reduced1.

If you haven't already looked at the new modern awards, this is the ideal time for you to become familiar with the new provisions.

For more details on the national system, including information on Modern Awards, we suggest you visit

We have found the 'Live Chat' on the website very helpful in finding a quick answer to our questions and highly recommend it if you have any questions.

Let's say the rate of pay under the applicable transitional instrument for a full time employee is $18 per hour and the modern award sets the rate of pay at $20 per hour.

Until 1 July 2010, the employer can continue to pay the employee $18 per hour, however, on 1 July 2010 the employer would need to pay 20 per cent of the difference between the modern award rate and the transitional instrument rate, which would be $18.40 per hour.

The remaining increases will be implemented in equal instalments until 1 July 2014.

The employer will also be required to pay any increase in minimum wages in the modern award resulting from any annual wage review conducted by Fair Work Australia 2.


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This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.

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