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Modern Award changes – Fact Sheet 2 – Enhanced industry allowance

The Fair Work Commission (Commission) has confirmed changes to the Building and Construction General Onsite Award 2010 (Onsite Award) will commence from 1 July 2020. HIA recommends you consider the changes as some will have an immediate effect on your employee’s terms and conditions.

Enhanced industry allowance

The new enhanced industry allowance will remove and replace 52 complex industry, disability and expense related allowances, with an enhanced industry allowance. This will immediately affect all employees employed under the Onsite Award, as it will impact the minimum hourly rates of pay. 

Currently under the Onsite Award, you’re required to pay industry, tool, and special allowances, in addition to an employee’s base rate of pay. 

Additionally you may also be required to pay other allowances, which are incidental and depend on the nature of the work the employee is carrying out. For example, a tiler may be entitled to a tile cutting allowance for a few hours of a working day when he or she is cutting tiles for a job.  

Traditionally the application of these other allowances, known as disability allowances has been difficult for employers to manage, due to the changing nature of work, and the potential for numerous allowances to apply at once.

Frequently asked questions regarding the enhanced industry allowance

 How does the enhanced industry allowance apply?

The industry allowance is paid in addition to an employee’s weekly rate of pay, and is dependent on the work carried out. The allowance is broken into two categories:

  1. General building and construction industry, civil construction industry and metal and engineering construction industry – an allowance of 6% of the weekly standard rate; or
  2. Residential building and construction industry – an allowance of 4.8% of the weekly standard rate.

The key to knowing which industry allowance applies is determining whether or not the works fall within the definition of the residential building and construction industry.

What does this change mean?

Generally, you will no longer be required to pay disability allowances which are based on the type of works your employees are doing (there are some exceptions to this, as detailed below). To compensate for any loss associated with the removal of these allowances, you will be required to pay an enhanced industry allowance, the application of which depends on the type of construction work the employer carries out.

When does the residential construction industry allowance apply?

The residential building and construction industry allowance applies when the following activities are undertaken in relation to a ‘single occupancy’ or ‘dual occupancy’ residential building which is less than five storeys:

  • the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land 
  • site clearance, earth-moving, excavation, site restoration, landscaping and the provision of car parks and other access works associated with the activities within the above work, and 
  • the installation in any building, structure or works of fittings and services.

Key as to whether the residential allowance will apply is determining whether the works relate to a single OR dual occupancy dwelling under 5 storeys.  Problematically single occupancy and dual occupancy dwellings are not defined within the Onsite Award.

HIA provides the following guidance:

The residential construction industry allowance will apply to construction works which are:

  • Less than five storeys high, AND
  • Consist of 1–2 ‘residential living spaces’ (e.g. two separate kitchens, two separate main bedrooms etc), which could mean single or dual occupancy dwellings, duplex, townhouses, house and granny flat, or dual occupancy on the same title.

Importantly these examples will not be exhaustive. We always recommend that where it is not clear if works fall within the scope of this definition, to contact HIA. Understanding of this provision will evolve over time.

How is the industry allowance calculated?

It’s not a simple matter of adding the 4.8% or 6% to the employee’s hourly rate, the percentage applies to the ‘weekly standard rate’, which as per clause 3.1 of the Onsite Award, is the weekly minimum wage for Level 3 (CW/ECW 3). Never fear however, HIA will make understanding this process simple through our wage sheets.

Do any other allowances remain?

Yes, the following allowances remain within the Onsite Award:

  • Site and general wage allowances – Industry, underground, multistorey, laser operation, laser safety officer allowance, carpenter diver, air-conditioning industry and refrigeration industry, first aid, electricians licence, in charge of plant;
  • Special rates – computing quantities, scaffolding or rigging certificate allowance;
  • Expense allowances – tool and employee protection, meal, compensation for clothes and tools; and
  • Travel, Living away from home, and inclement weather.

Which allowances are no longer applicable?

From 1 July 2020, the following allowances are no longer applicable under the Onsite Award:

  • Site and general wage allowances – Special, refractory bricklaying, coffer dam worker; and
  • Special rates – insulation, hot work, cold work, confined space, swing scaffold, explosive powered tools, wet work, dirty work, toxic substances, fumes, asbestos, asbestos eradication, furnace work, acid work, heavy blocks, bitumen work, height work, suspended perimeter work platform, employees carrying fuels, oils and greases, pile driving, dual lift allowance, stonemasons, towers, cleaning down brickwork, bagging, plaster or composition spray, slushing, dry polishing of tiles, cutting tiles, second-hand timber, roof repairs, grindstone allowance, brewery cylinders- painters, spray application- painters, pneumatic tool operation, bricklayer operating cutting machine, hydraulic hammer, waste disposal, pipe enameling, powdered lime dust, sand blasting, liver sewer work, timbering, special work, compressed air work, cutting stone.

This information is part of a series of updates on the Modern Award changes aimed at assisting members understand the requirements. More information can be found in the articles in the ‘What to read next’ section. 

To find out more, contact HIA's Workplace Services team

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