Determining Award Coverage: Is it Industry or Occupation?
An important decision handed down by the Fair Work Commission (“FWC”) has finally provided employers with clarity on the issue of Modern Award coverage for administrative employees working in Child Care Centres.
Employers often make the bare assumption that the Industry within which the employee works is the sole factor which determines which Modern Award covers an employee’s employment. This assumption is incorrect, as this case demonstrates.
In the case of United Voice v Cuddlepie Early Childhood Learning Centre  FWC 6661, Deputy President Sams (“DP Sams”) was required to determine Award coverage for an employee performing work that was substantially “administrative” in nature; the employee worked under the title of Administrative Officer. The options were that either the employee’s employment was covered by the Children’s Services Award 2010 (an industry based award) or the Clerks Private Sector Award 2010 (an occupational award).
Following careful analysis of the employee’s duties, DP Sams determined that the employee wholly or principally performed clerical work, including administrative duties of a clerical nature. The employee carried out her duties in an office, not a classroom where children’s services were provided.
After careful consideration of the actual duties performed by the employee, DP Sams determined that the employee was in fact covered by the Clerks Private Sector Award 2010, not the Children’s Services Award 2010 (which the employer had incorrectly applied to this employee in the first instance).
Unfortunately for the employer, the wage rates were significantly higher under the Clerks Private Sector Award 2010.
As a consequence of the error in classification of this employee, DP Sams expressed an expectation that the employer should take steps to rectify not just her Award coverage and classification but also pay her back pay for the difference in the Award pay rates.
Message for Employers
Employers must ensure they closely analyse and examine the duties an employee performs, against the classification(s) under the Award before making a determination about which Award in fact applies.
The fact that an employee performs work within the said Industry is not the sole determining factor when considering whether a particular Award will have application to the employment of an employee or employees.
It is quite possible that more than one Modern Award may apply to an employer’s business.
This case is a reminder for Employers to avoid making assumptions about Award coverage and if in doubt, seek legal advice.
If Award coverage is not properly determined upon the employee’s commencement of employment, as occurred in this case, the Employer may be liable for back pay to the employee, and in addition, if prosecuted, may be liable to pay pecuniary penalties as prescribed under the Fair Work Act 2009 (Cth) (“FW Act”).
Under the FW Act, the Court has the power to order the payment of pecuniary penalties up to a maximum of $10,200.00 for an individual and $51,000.00 for an Employer, per contravention.
In many such cases, this has resulted in serious consequences for employers, and in some cases, has resulted in the demise of the company / business.
We encourage Employers to consider the costs of seeking professional legal advice against the costs associated with getting it wrong.