205,816 Chances to Win
If this looks complicated, it’s because it is.
Here is how Australia’s 122 modern awards map onto the industries of our economy and the ANZSCO occupation groups most people are employed in.
What you are looking at is the most complex system of minimum wages in the developed world. A uniquely Australian failure.
We are the only country that makes it more difficult, not less, for the act of paying someone for a day’s work.
And underneath it all sits an assumption that is an insult to the very workers the unions and the Labor Party claim to protect: that every employee is too helpless to strike a fair bargain, that every employer is waiting to exploit them, and that without 8,739 pages of instruction the whole country would be on survival wages.
The countries that abandoned this kind of prescription have not gone back, and their workers have not been reduced to anything.
How does anyone expect productivity from a system in which every worker is a number on a scale? Under an award you are not a person who works hard, learns fast or turns up when nobody else will. You are a Level 3 or a Grade 2.
The award pays the box, not the person in it.
We simply cannot keep doing this. Every year of delay adds another 200 pages, another few thousand rates and another round of honest employers prosecuted for guessing wrong.
The Productivity Commission has already told us that the decade to 2020, the first decade of the Fair Work Act, delivered the slowest labour productivity growth in 60 years. Things are no better now.
A country where employers face obscene complexity when working out what to pay their people cannot expect them to hire more of them. The nation’s prosperity is now at stake, and the time for another round of tinkering is over.
This week, H.R. Nicholls launched The Wage Lottery, the first full count of the modern award system since its creation in 2009, and its findings are alarming.
What we did
Nobody had ever counted what the modern award system actually contains. So we did.
We went through the Fair Work Ombudsman’s own pay guides for all 122 modern awards and counted every separate legal rate of pay.
We went through every version of every award the Fair Work Commission has published since 2009 and counted the pages and the amendments.
The award-by-award table is in the report, and the Awards Complexity Register is now online so anyone can check it.
What we found
122 modern awards containing 205,816 separate legal rates of pay, an average of 1,687 per award, and 1,900 employee classifications.
The awards have grown from 5,137 pages in 2009 to 8,739 pages today: 3,602 new pages, more than 200 a year, four every week, for seventeen years straight. That is close to one new page for every working day of the year.
They have been amended 7,568 times, which is 62 variations per award and, across the system, more than one change every single day (Weekends included, for which the awards would normally charge extra) since 2009.
There is now a different legal rate of pay for every 16 workers the awards cover.
It is hard to imagine the pretext for how these were introduced.
In March 2009 Julia Gillard, as the responsible minister, asked for modern awards that would be “simple to understand and easy to apply” and would “reduce the regulatory burden on business”.
Seventeen years later, that notion has been trashed.
It is not 122 rulebooks. It is a lattice.
We mapped every award against the ABS occupation groups and industry divisions.
The 122 awards contain 390 separate links to the eight occupation groups and 128 links to the nineteen industries.
A tradesperson can fall under any of 87 awards, a labourer under 82, a machinery operator or driver under 62.
Only 18 awards cover a single kind of worker.
Which award applies depends not on the work a person does but on the industry their employer is deemed to be in, which is why the question “which award?” ended up in the Full Federal Court for a swim coach, whose coverage went from “no award at all” at trial to the Fitness Industry Award on appeal.
The awards contradict the Act they sit under.
The model clause in the awards tells employers to pay termination entitlements within seven days. The Fair Work Act says untaken annual leave must be paid when employment ends.
Follow the award and you breach the Act, and an employer has already paid a $17,000 penalty in exactly that gap.
The awards define “wages” fourteen different ways and the frequency of payment sixty-six different ways.
The Building and Construction General On-site Award still requires wages to be paid weekly, on a Thursday. Pay your crew on a Friday and you have broken the law: not underpaid them, paid them on the wrong day.
And some of it is simply absurd.
Under the Restaurant Industry Award there is a 64-cent-an-hour difference between the person who carries a plate to the table and the person who takes it away. If the same waiter does both, you must work out which task predominates.
An adult full-time or part-time baker at Retail Level 1 who bakes the bread before dawn is paid $4.65 an hour less than the person doing exactly the same job in the evening. Both are working outside ordinary hours.
The award has simply taken a firm view on which of the two is the inconvenient hour, and it is not the one before dawn.
Next time you are on a plane and catch a glimpse of the cockpit and the pilot is wearing a wetsuit, weight belt, snorkel and flying gloves, there is no cause for alarm. That is just a pilot exercising the right to have the employer pay for these items as tools of the trade.
Someone who is “principally employed” to stack the shelves in the cool section is entitled to an extra 38 cents an hour, and a further 59 cents an hour if the chamber is below 0°C.
What does “principally employed” mean? How long does an employee have to spend in the cold before the extra cents become payable? The Fair Work Ombudsman was asked to clarify this 18 months ago and has still not answered.
The award system has five different prices for standing in the same freezer, and one of them is still set in Fahrenheit.
Ninety-six awards treat Christmas as an ordinary public holiday; the other 26 each do something different, from a 300 per cent rate under Marine Tourism to a Hospitality clause covering “Christmas Day when it falls on a weekend and is not a public holiday”, which under the Act it always is.
The Graphic Arts award still gives New South Wales printers a day off on the “Tuesday after Easter Monday”, which is a union picnic day renamed in 2005 and untouched by two decades of “modernisation”.
Whether anyone still attends the picnic is unknown. The day off, however, is in excellent health.
The review was a farce.
The Act required the Commission to review every award every four years. The first review began in 2014 and took eight years: more than 1,300 days of hearings, 25,000 documents and 700 decisions.
It was still only halfway through when, in 2018, Parliament quietly repealed the requirement to ever do it again.
During that review the Commission’s own Full Bench said with no apparent irony that an award “should be able to be read by an employer or employee without needing a history lesson or paid advocate”.
Today not one of them can be.
The report is already making a splash: coverage in The Australian and Workplace Express, and an interview on ABC Radio.
And the fight is just beginning.
What we are proposing
The report makes thirteen recommendations.
None of them cuts a wage or abolishes a penalty rate.
All of them make the right wage easier to pay.
Most are so obvious that the only remarkable thing is that nobody has done them.
(1) Rebuild the awards on a single axis, by occupation, so that no worker can ever fall under more than one award.
(2) Confine awards to wages and classifications, and move every other condition into a single national standard.
(3) Collapse the 1,900 classifications and 205,816 rates into a small number of skill-based rates an employer can apply from a job description alone.
(4) Remove every contradiction between the awards and the Act, and strip out the picnic days and legacy entitlements while we are at it.
(5) Write flexibility by agreement into every standard.
(6) Lift the definition of a small business from 15 employees to 50.
(7) Create a plain-English Small Business Employment Code that small businesses can elect to use in place of the awards, with deemed compliance for those who follow it.
(8) Review every other obligation as it applies to small business.
(9) Permit individual agreements that override an award, with a no-disadvantage test against the national standards and free, informed and genuine consent.
(10) Extend loaded and averaged rates to every award, as the Productivity Commission has recommended.
(11) Put the Commission under a statutory duty to simplify, with a public annual scorecard of rates, classifications and pages.
(12) Let employers obtain binding rulings on their obligations before the pay run, rather than a penalty after it.
(13) Report annually on which clauses cause the breaches, and stop escalating penalties until someone asks why the breaches occur.
We cannot keep doing this
Seventeen years ago we were promised simple. We got 205,816 and counting.
Every honest employer in the country is now one pay run away from a penalty, every worker one classification away from being underpaid. Complexity protects nobody except the people paid to interpret it, and they are not the ones who need protecting.
