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The Fair Work Commission (FWC) has just handed down a decision varying the Building and Construction General On-site Award 2010 (“the Award”). The variation will result in an increased industry allowance, with majority of the Award disability allowances abolished. For the first time, the Award’s industry allowance will distinguish between “residential building and construction” on the one hand and all other forms of building on the other.

Industry allowance increase

The industry allowance will be increased from the current rate of 3.7% of the weekly standard rate to the following:

Residential building and construction industry: 4.8% of the weekly standard rate.
All others (ie. general building and construction industry, civil construction industry and

the metal and engineering construction industry): 6% of the weekly standard rate;

“Residential building and construction” will be defined as work in the general building and construction sector (as defined in clause 4.10(a)) where it is undertaken in relation to a single occupancy residential building which is not a multi-storey building as defined by the Award.

The determination does not yet deal with how workers who cross-over between these sectors are to be treated, although caution would be recommended where such cross-over occurs.

Effective Base Rate of Pay Increase

Because the industry allowance is part of the employee’s base rate of pay, the effect of this decision is that all employees will be paid a higher rate of pay. It also means that there will be different minimum award rates payable depending on whether in the residential sector or not.

Removal of Award disability allowances

The reason for increasing the industry allowance was to simplify the Award’s current array ofallowances, which are not well understood and confusing to implement. In increasing the industry allowance, the FWC has also removed most disability allowances in the Award.

Clause 21 of the Award, which prescribes site and general wage-related allowances, will have the special allowance, refractory bricklaying allowance, and coffer dam worker allowance removed.

The special rates applicable to all sectors under clause 22.2 and all special rates applicable only to the civil contraction sector under clause 22.4 will all be removed as will the majority of special rates applicable only to the general building and construction sector, with only the skill-based computing quantities and scaffolding or rigging certificate allowances remaining.

It is noted that although the “Towers Allowance” in clause 22.3(a) will be deleted it will, in effect, become part of the “multi-storey allowance” in clause 21.4 so that work on a tower or other structure that is of comparable height to the equivalent multi-storey increment will be paid at the higher rate.

Hot and Cold work additional breaks

While employees who work in temperatures that have either been raised or lowered by artificial

means will no longer be entitled to an allowance, employees who work for more than two hours in a place where the temperatures have either been raised (46 degrees Celsius and above) or lowered by artificial means (less than 0 degrees Celsius) will be entitled to 20 minutes rest after every two hours without loss of pay.

Who does this affect?

This decision affects all employees who the Award applies to. If you have award-basedemployees who are paid above award rates, the ‘absorption’ principle means that you do nothave to increase above-award payments unless the hourly rate with the increased industry allowance minimum is higher than the employee’s current rate, in which case you must pay at least the new minimum.

Employers covered by enterprise agreements (including pre-Fair Work Act 2009 agreements) will need to ensure that the base rate of pay is at least equal to the new Award hourly rate as such, you will need to check your base rate of pay for these employees but are otherwise unaffected.

NB: even if an agreement has expired, it remains in force until it is replaced by a new one or the FWC terminates the agreement. This applies to most pre-Fair Work Act 2009 agreements.

Operational date

The variation will take effect on and from the first full pay period on or after 1 January 2020.

The FWC is currently finalising the terms of the order to give effect to the decision.

Need more information

If you would like further information about award rates, or to check your existing agreement rates, please contact the team at Fair Work Lawyers.