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Fair Work Five: Not Properly Implementing Agreement Terms

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Recently, Tanda released the “Fair Work Five” Webinar, which discusses the top five reasons businesses are self-disclosing underpayments to the Fair Work Ombudsman.

As part of the series, Tanda is also releasing articles on each of the five issues.

This second piece will discuss failing to properly implement award or enterprise agreement terms.

Fair Work Crackdown

Underpayment of Australian workers remains the number one issue for the Fair Work Ombudsman. More than $100 million in underpaid wages have been recovered from businesses Australia-wide in the last financial year alone. Importantly, Fair Work structures the vast majority of its compliance action around detecting and recovering underpayment. 

Failing to implement all award or enterprise agreement terms can lead to underpayment of Australian workers, and could see your business audited and sanctioned by the Fair Work Ombudsman.

Not properly implementing new agreement terms

The second part of our series will cover not properly implementing agreement terms in Awards or Enterprise Agreements in Australia. It may sound like a basic error to make, but it’s quite easy to get mixed up when implementing complicated parts of industrial relations instruments.

Fair Work has also recently broadened its description of this practice. Previously, the Ombudsman described it as “failing to implement all the terms of a new enterprise agreement”. The new definition describes it as “failing to implement, or using a different approach to, all the terms of a new enterprise agreement”. 

This new description is indicative of Fair Work’s view on this issue. The Ombudsman believes some Australian businesses don’t comply with some of the conditions of enterprise agreements by using ‘alternate approaches’ to implementing them. The Ombudsman has made it clear this will not be tolerated.

Tanda believes that there are three common mistakes that lead to awards or enterprise agreements not being properly implemented.

Miscommunication

Miscommunication between the Australian employees who negotiate an enterprise agreement, and payroll, who implement it, is one cause. Enterprise agreements are complex, full of legal terminology, and can also be lengthy. Miscommunicating any changed details to your payroll staff could result in the new terms not being implemented correctly. It’s important to communicate the terms of the deal in plain, straightforward language to your payroll department, and make yourself available for questions and clarifications.

Natural Tendency Towards Inertia

Changing enterprise agreements is a difficult and time-consuming process. This naturally leans towards taking shortcuts or thinking a term may not apply or isn’t as broad as it is. It’s important to avoid this by rigorously reviewing your agreements when they change. 

Creative Interpretations

Australian businesses will also sometimes agree to change a clause of an enterprise agreement without thinking through the consequences properly. This can lead to ‘creative interpretations’ when implementing the agreement, which sees the use of stop-gap solutions to try and get around some of the new conditions. It’s important to avoid ‘edgy’ interpretations and to implement the terms of the agreement in full. Take a cautious and broad view of how the wording of the agreement might be interpreted. If it looks like it could mean something, closely scrutinise the clause in question.

It’s also important to legacy proof your system – you need a system capable of change. For example, being overly reliant on one staff member who is knowledgeable about the agreements could leave you vulnerable when they leave. Designing a system that can be updated easily and manage new agreements is crucial.

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