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Major changes to Building and Construction Award
Over the past few months, there have been a number of decisions made by the Fair Work Commission which have resulted in significant changes to the Building and Construction General On-site Award 2010.
These are variously associated with the 2019-2020 Annual Wage Review, the modern award review process and temporary arrangements that have been introduced due to the COVID-19 pandemic.
Details of all of these changes are set out below.
2019-2020 Annual Wage Review
The Fair Work Commission recently handed down the 2019-2020 Annual Wage Review decision which was to increase the national minimum wage and award minimum wages by 1.75%.
Unusually this year, in light of the COVID-19 pandemic impact on businesses, they decided to set different operative dates for different industries – in the case of the building and construction and trades awards, that date is 1 November 2020 (rather than the standard date of 1 July that normally applies).
Employers should check that employees’ wages are at or above award wage level including allowance for any award conditions set off in remuneration.
The current Fair Work Ombudsman Pay Guide for this Award can be accessed at Building and Construction General On-site Award [MA000020] Pay Guide
This will be updated from 1 November 2020 when the new rates take effect.
Modern award review
The modern award review process which has been going on since 2013 has a resulted in a number of changes to calculation of minimum wages, the treatment and application of allowances, arrangement of ordinary hours of work and RDOs and various other matters – these generally take effect from 1 July 2020.
Simplification of minimum award wage calculations
The Building and Construction General On-site Award 2010 has had an extremely complicated method of calculating the award rate for each classification level in the Award.
This involved firstly identifying the base rate applicable to the relevant classification level and then adding a Special Allowance off $7.70 per week (something that was created years ago to give employees a pay rise when the rules didn’t allow for one) and then adding an industry allowance and, if the employee qualified, a variety of other allowances could apply.
The industry allowance was intended to compensate employees for the nature of the industry but additionally there were a number of allowances and special rates that applied on top of this.
From 1 July 2020, the method for calculating ordinary time rates for weekly employees (as per Clause 19.3 (b) of the Award) is by adding the minimum wage specified and the industry allowance for the industry sector and then any of the following that have application to the employee in question:
- Tools and protective or other clothing or equipment (Clause 20.1)
- Underground allowance (Clause 22.2)
- Air-conditioning and refrigeration industry allowances (Clause 22.7)
- Electrician’s licence allowance (Clause 22.8)
- In charge of plant allowance (Clause 22.9)
The industry allowance has been amended to reflect a single industry allowance that replaces and compensates for the Special Allowance and a number of complex industry, disability and expense related allowances have been removed in the Award. The rate for the industry allowance is based on the relevant construction sector and has been defined as a percentage of the “weekly standard rate” (standard rate means either the weekly or hourly minimum wage as stated for a Level 3 (CW/ECW 3) employee in clause 19.1). There is one rate for the commercial building industry (6% of the weekly standard rate = $51.75 per week) and a second for the residential building industry (4.8% of the weekly standard rate = $41.40 per week).
The tool allowance has also been revised to make it clear that employees are entitled to the allowance to cover maintaining their existing tools, not just purchasing new tools. Employees are also now entitled to be reimbursed for steel capped boots they are required to wear.
Fares and travel pattern allowance
A significant change relates to the fares and travel pattern allowance employees receive. This allowance is normally $17.43 per day. Employees will now only receive this allowance, where they:
- start and finish their work day on a construction site; or
- are required to perform prefabricated work in an open yard and are then required to erect or fix the pre-fabricated materials on-site.
So employees who start and finish at a depot and are transported in paid time to and from the construction site are generally not eligible for the allowance.
Additionally, Employees will no longer receive the travel allowance if they are offered free transport to the site or provided with a vehicle. Employees will also no longer get the allowance on days they do not work, like on an RDO or leave day.
Living away from home allowance
The Award amendments clarify an employer’s obligations in relation to this allowance. There are now clear options as to how entitlements are to be provided and how meal expenses can be reimbursed as follows:
(i) pay the employee the greater of $72.02 per day or an amount which fully reimburses the employee for all reasonable accommodation and meal expenses incurred; or
(ii) provide the worker with accommodation and three adequate meals each day; or
(iii) provide the worker with accommodation and reimburse the employee for all reasonable meal expenses; or
(iv) where employees are required to live in camp, provide all board and accommodation free of charge.
Rostered Days Off (RDOs)
The Award now provides greater flexibility in relation to RDOs. This includes allowing for the banking of RDOs and allowing an agreement to be reached between the employee and employer as to how and when an RDO is taken.
Capping of daily ordinary hours
Ordinary hours of work for part-time and casual employees have been capped at 8 hours per day. This means that any hours worked in excess of 8 hours per day by a part-time or casual employee are overtime and payable at overtime rates.
It should be noted that, for full-time employees, the award prescribes that, unless the employer and a majority of employees agree otherwise, an RDO arrangement applies whereby 19 days of 8 hours and 1 RDO make up each 20 days (4 weeks) worked.
If the employer and employees agree on a variation to that arrangement, no more than 8 ordinary hours can be worked in one day.
Under any hours of work arrangement, full-time employees may work no more than 38 ordinary hours can be worked in one week (or an average of 38 hours over 4 weeks).
Time off in lieu of overtime
The Award now allows an employer and employee to agree to take time off instead of being paid for overtime that has been worked. This ability is limited to weekly full-time and part-time employees and time off is calculated on the basis of the hours of overtime actually worked. Time off must be taken within 6 months. There are a number of other conditions attached to time off in lieu arrangements that must be complied with.
Payment of annual leave loading
The Award now simplifies how annual leave loading is to be calculated – on the employee’s ordinary rate of pay rather than the complicated arrangement that existed previously.
Employers should familiarise themselves with the proposed changes to ensure that from the start of the first full pay period on or after 1 July 2020, their employees are being paid correctly and in line with any amendments to the Building Award.
Please note that the modern award review process has not been completed for the Building and Construction General On-site Award 2010 but that should occur in the next few months – when it has, the “2010” will be replaced with “2020.
Additional measures during the COVID-19 pandemic
There is a new Schedule X in the Award setting out temporary flexibilities with leave during the COVID-19 pandemic – these apply for the period from 11 August 2020 to 30 September 2020.
These provide that:
- employees can take up to 2 weeks if the employee is required by government or medical authorities or on the advice of a medical practitioner to self-isolate and is consequently prevented from working, or is otherwise prevented from working by measures taken by government or medical authorities in response to the COVID-19 pandemic.
- instead of an employee taking paid annual leave on full pay, the employee and their employer may agree to the employee taking twice as much leave on half pay.
- A number of conditions are attached to these arrangements.
Given the current business and civil restrictions applying in Victoria, it could be expected that there will be an extension to the period of operation of these arrangements.
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