Employer Alert: Changes in Apprentice Pay Rates

A recent decision by the Full Bench of the Fair Work Commission is likely to have a significant impact on some Queensland employers who employ apprentices as it will lead to some apprentices being paid higher wages than they have been in the past. Some employers may also be liable for back-payment of underpaid wages.

Background

All Trades Queensland Pty Ltd (ATQ) sought to enter into a new enterprise agreement under which the “Better Off Overall Test” (BOOT) would be based on a comparison with the previous state based awards and not the modern awards. This was based on previous understandings that the state based awards were transitional instruments which had continued in operation after January 2014 (when many transitional instruments ceased to operate) and they could therefore be relied on for the purposes of the BOOT.

Wages for first and second year apprentices are lower in many state based awards than under the modern awards and at first instance, Commissioner Spencer determined that because the apprentices were covered by the relevant modern awards and not the old state based awards, the proposed enterprise agreement did not meet the BOOT. Commissioner Spencer declined to approve the agreement on that basis.

ATQ (with the support of HIA, the QMBA and Apprentice Employment Network) appealed to the Full Bench of the Fair Work Commission and argued that under the transitional arrangements, the state awards continued to cover the employees because they had covered them prior to 2010 when the Fair Work Act came into effect.

The Full Bench did not accept ATQ’s argument, instead determining that the relevant instruments had ceased to operate in January 2014: that the employees had been covered by the relevant modern awards since January 2014 and as a consequence, the proposed enterprise agreement did not meet the BOOT.

Effect of the decision

The ruling is likely to have a significant effect on employers who employ some apprentices. It means that the modern awards have applied to apprentices and trainees employed in Queensland after January 2014 and employers are required to pay wages in accordance with the rates of pay prescribed in the modern awards.

It also means some employers may have been paying their apprentices less than the award rate since 2014, as generally, first and second year rates under the Queensland state awards are less than those under the modern awards. Differences in rates will depend on a number of factors, such as the trade involved, the stage of the apprenticeship and whether the employer has been paying over award rates of pay.

Employers and employees who are concerned about the impact of the decision should contact our Employment Law team on 47600 100.