Ai Group TV Videos are produced by Ai Group. They are intended to provide general information in summary form on a range of topics, current at the time of publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal and workplace advice can be provided by Ai Group and Ai Group Legal. For legal advice, please contact Ai Group Legal on 1300 554 581 or for general workplace relations advice, please call BIZassistInfoline on
1300 78 38 44.
Transcript - Transitional Provisions in modern awards
From 1 January 2010, as part of the move towards a national workplace relations system, 1000's of State and federal awards were subsumed into 122 modern awards as part of an award simplification process.
To give employers and employees time to adjust to the changes between pre-modern and modern awards, many modern awards contain transitional provisions.
The majority of awards contain the model transitional provisions which apply to:
- minimum wages and piecework rates;
- casual or part-time loadings;
- weekend, public holiday, evening or other penalties; and
- shift allowances/penalties.
The model transitional provisions allowed employers to wait until 1 July 2010 to start paying under the modern award. It is from this date that pay rates, loadings and penalties are phased over a 4 year period. The model transitional provisions can be found at Schedule A in applicable modern awards.
It should be noted that some modern awards contain non-model transitional provisions, which apply in a variety of different ways, or no transitional provisions at all.
To calculate your award obligations under the model transitional provisions you need:
The rate, penalty or loading which applied to an employee under the relevant pre-modern award immediately prior to 1 January 2010; and
- The rate, penalty or loading set out in the applicable modern award on 1 January 2010 for that employee.
The difference between two pay rates is known as the transitional amount. and the difference between two loadings or penalties is known as the transitional percentage.
When compared to the pre-modern award, the modern award amounts may be higher, lower or the same. These increases or decreases will be phased in over the four year period in 20 per cent instalments, starting from the first full pay period on or after 1 July 2010.
Where the modern award rate is higher than the pre-modern award rate the instalments will start with 80% of the transitional difference being subtracted from the modern award rate, penalty or loading. Where the modern award rate is lower than the pre-modern award rate the instalments will start with 80% of the transitional difference being added to the modern award rate, penalty or loading.
The modern award pay rates, loadings and penalties will apply in full from the first full pay period on or after 1 July 2014.
There are some scenarios however where you would not have to apply the model transitional provisions to the rates of pay, even where they apply to the award.
One is where the modern award pay rate is less than the pre-modern award rate, and the transitional amount, i.e. the difference between these two rates, is equal to or less than the 2010 Fair Work Australia Annual Wage Review increase.
Also, where you have agreed to pay employees above the transitional or modern award pay rates, and there is an agreement with the employee to offset the award conditions with the higher pay, again the transitional provisions would not need to be applied.
Additionally, if employees are covered by an enterprise agreement, transitional provisions would not apply to pay rates or loadings and penalties, if the agreement complies with the transitional provisions for rates of pay of permanent employees in the relevant award.
It is important to note that neither the making of a modern award, nor the operation of the transitional provisions is intended to result in a reduction in the take-home pay of employees covered by the award. If an employee suffers a reduction in take home pay, Fair Work Australia may issue an order remedying the situation.
Applying the transitional provisions can be a complex process. For members requiring assistance, please call our BIZassistInfoline on 1300 78 38 44 to speak to an adviser. Alternatively, Ai Group's Online Transitional Provisions Calculator can also help in calculating transitional payments.