Learn more about how the Fair Work Act 2009 will impact your company. With so much media coverage about different aspects of and amendments to the proposed changes to the Industrial Relations system you may be a little confused.

As mentioned in our last newsletter, with so many changes occurring in the employee relations sphere we will summarise the key elements over two newsletter issues.

Since our last newsletter some significant announcements have been made regarding the implementation of the Fair Work System.

These are, an increase in the high income threshold and a phasing in of modern award provisions.

An increase in the high income threshold

Under the new Unfair Dismissal System – this means that employees who have earnings greater than $108,300 are excluded from bringing an unfair dismissal claim. The definition of earnings in this regard is significant.

In calculating what is considered ‘earnings' under the 'high income threshold', the following payments made to an employee will be taken into account:

• the employees' wages;
• additional amounts applied or dealt with in any way on the employee's behalf (for example, through a salary sacrifice arrangement)
• the agreed monetary value of any non-monetary benefit (such as the use of a company car, laptop or mobile phone).

In contrast, the following amounts cannot be taken into account when calculating an employee's earnings for the purposes of determining the 'high income threshold':

• payments in which the amount cannot be determined in advance;
• reimbursements for business expenses;
• contributions made on behalf of an employee for superannuation which are prescribed by a law of the Commonwealth, State or Territory.

The 'high income threshold' is likely to be reviewed and amended each financial year.

A phasing in of modern award provisions

The phasing in of modern award provisions relating to minimum wages, loadings, penalties and shift allowances will now commence from 1 July 2010. Previously it was planned that new award rates would commence on January 1 2010, however in order to assist employers manage the costs, a “phasing in” will occur and employers will generally have 5 years to transition to the new award and penalty rates.

The full bench has opted for a five-year phase-in mechanism designed to help employers cope with the impact of award modernisation. To further simplify the transitional arrangements, the phase-in provisions only apply to minimum wages, including wages for junior employees, employees to whom training arrangements apply and employees with a disability, casual and part-time loadings, Saturday, Sunday, public holiday, evening and other penalties and shift allowances.

And, significantly, changes will only start phasing-in from July 1, 2010 - six months after modern awards commence - and take effect in 20% annual increments.

If you have any concerns about these changes as they apply to your business please contact Your HRmanager on (02) 9415 3561.