Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Trainees

Modern award minimum wages for employees undertaking an approved traineeship are generally set by the National Training Wage Schedule that forms part of most modern awards. Some modern awards contain separate trainee rates.

Traineeship wages contained in the National Training Wage schedule range from around 45% to 90% of the national minimum wage, depending on the highest level of schooling the trainee obtained, the number of years out of school, and the training package and qualification level.

Trainees undertaking a certificate level IV traineeship are paid an additional loading, and adult trainees receive higher percentage rates of the national minimum wage. Existing workers who commence a traineeship have their existing minimum rate of pay protected.

The ACTU supports the current process of traineeship rates being adjusted in line with increases to the national minimum wage and adult classification rates through the annual minimum wage review process.
We note that there has been no major review of how traineeship rates are formulated since the National Training Wage Award was first established in 1994. There would be value in a review at some point to determine the ongoing adequacy of the national training wage rates of pay, the appropriateness of the current three tier wage structure based on the type of training package, level of qualification and level of schooling, and whether the extent of training and skills development is sufficient to warrant the discounted rate of pay.
As indicated above, these are the types of matters that the FW Commission should continue to have the power to consider and determine based on any relevant applications that come before it.

9	The Safety Net: (2A) The Award System.

The modern awards objective makes it clear that the primary purpose of modern awards is to provide a fair and relevant safety net of terms and conditions of taking into account a range of economic and social factors.

We reject the proposition that ‘the tax and transfer system, the NES and minimum wages already serve as adequate safety nets’.²³³

Modern awards operate in conjunction with the NES to provide a comprehensive safety net for employees in the federal system. Unlike its predecessor, the FW Act situates minimum wages within modern awards. It also expressly provides that modern awards may include terms that are ancillary or incidental to the operation of an entitlement of an employee under the NES and terms that supplement the NES but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES.²³⁴ Minimum terms and conditions of employment are regulated by the NES and modern awards working together.

Modern awards contain matters that must be regulated in order to ensure that employees have access to fair wages and conditions including reasonable working hours, compensation for working unsociable hours or in unpleasant or dangerous conditions, access to consultation and dispute resolution, notice of termination and superannuation. The exploitative practices adopted by employers following the enactment of WorkChoices, which enabled award conditions to be removed by individual ‘agreement’, clearly demonstrates that the risk to employees of eliminating or reducing award regulation is not simply theoretical. ²³⁵

Further, the legislative provisions do not contain sufficient detail to provide an appropriate safety net even in relation to those matters covered by the NES. For this reason it is has been necessary to supplement the NES through more prescriptive award provisions. The additional regulation ensures that the safety net more properly balances the needs of employers and employees. For example, the NES provisions that require annual leave is taken at mutually agreed time are qualified by award close-down provisions that enable businesses in certain industries to direct employees to take annual leave provided certain requirements are met. Similarly, the NES entitlement to severance pay is supplemented by award provisions that deal with other matters connected to redundancy such as notice periods.

The modern awards objective

The Modern Awards Objective (MAO) sets out various factors that must be taken into account in determining a fair and relevant minimum safety net.

Subject to our view expressed in the previous chapter regarding the need to more directly reference reducing inequality and the incidence of low pay, we believe the MAO is well balanced. It enables the FWC to consider the competing interests of employers and employees in determining minimum standards and craft provisions that are ‘tailored to the needs of the particular industry or occupations’.²³⁶ As FWC has noted:

The characteristics of the employees and employers covered by modern awards varies between modern awards. To some extent the determination of a fair and relevant minimum safety net will be influenced by these contextual considerations. It follows that the application of the modern awards objective may result in different outcomes between different modern awards.²³⁷

That the content of modern awards accommodates differences between businesses as well as workers should not be overlooked. These differences explain why it is necessary to retain multiple modern awards with differing terms and conditions of employment. The level of prescription in awards is inextricably linked to the fact that the safety net takes into account, among other matters, the need to promote flexible modern work practices, the efficient and productive performance of work and impact on business, including on productivity, employment costs and the regulatory burden.
The capacity of the modern award system to provide minimum terms and conditions relevant to different parts of the workforce is one of its greatest strengths. As evidenced by our discussion in Chapter 4, flexibility is built into the framework and content of the safety net and consequently there is less need for parties to negotiate alternative arrangements in order to gain access to appropriate minimum terms and conditions of employment. Of course, it remains open to parties to enter into an arrangement that is in excess of the safety net.
The observation that modern awards “still spell out” minimum wages and conditions for a wide range of industries, occupations and skill levels implies that such provisions are outdated or irrelevant.²³⁸ Our position is that it is not possible to provide a fair and relevant safety net without taking into account work value.
Modern awards contain classification structures and minimum wage rates that are directly relevant to work performed in the industry/occupation covered by each award. The classification descriptors are broad enough to encompass the variety of jobs/roles performed by employees in different businesses as well sufficiently comprehensive to ensure that skills, qualifications and experience are properly rewarded. The inclusion of indicative tasks makes it easier for employers/employees to identify the relevant minimum wage level without prescribing business operations. Minimum wages are also underpinned by a system of external relativities that relates classification levels and rates of pay in each modern award to the C10 classification in the Manufacturing Award. These external relativities ensure that employees working in different industries and occupations who perform work of equal or comparable value are entitled to same minimum rate of pay.
We also wish to emphasise that flexibility must not be equated with reductions in award entitlements. The fact that employers succeeded in persuading FWC to reduce penalty rates in the Restaurant Award during the two year review of modern awards does not mean that award conditions are more flexible than minimum wages. Minimum wages are reviewed every 12 months as part of the annual wage review. It is also possible to vary minimum wages outside the annual wage review on work value grounds. There is ample scope under these provisions to ensure that minimum wages are fair and relevant.