Understanding Modern Awards
The national workplace relations system covers most private employers in Australia, which is a blanket term that incorporates minimum employment legislation and administrative and enforcement bodies created by the Fair Work Act 2009 (Fair Work Act) and associated instruments. The Fair Work Act includes the National Employment Standards (NES), modern awards and enterprise agreements and other registered agreements. Modern awards provide minimum conditions and entitlements for employees performing work in specific industries or occupations covered by the relevant modern award. As a business owner or an employer, you must ensure that any applicable modern award provisions are adhered to and correctly applied throughout your workplace. Different modern awards may apply depending on the industry in which your business operates, and the job types within your business, which can make it difficult to determine modern award coverage. This means that when determining the relevant modern award, if your business engages in various types of business activity, or incorporates very different job functions and roles, you may find that not all your employees fall under the same modern award if any. Keeping this in mind, it is essential that you develop and maintain a sound understanding of how modern awards apply and keep up to date with any changes. We can help you understand modern awards, and how relevant modern awards apply to your business. Call us for free initial advice on 1300 651 415.
What Is A Modern Award?
Modern awards provide the minimum entitlements that employees are entitled to because of the job they do. What modern award applies depends on the industry the employee works in, or their occupation. The minimum entitlements within the relevant modern award that apply to a specific employee depend on a variety of factors including their employment type, the employee’s qualifications or experience, the duties they perform, and when and where they work. Entitlements set out in the modern award include pay, hours of work, overtime rates, penalty rates, allowances, rosters, breaks and leave entitlements specific to the industry or occupation. The entitlements contained in a modern award cannot be less than the national minimum wage and the National Employment Standards (NES), which outlines 11 minimum standards for employment that apply to all employees in the national workplace relations system whether or not they are covered by an award or registered agreement, though casual employees may not get all of these entitlements because of the very nature of casual employment. These minimum standards are:
Maximum weekly hours
Flexible working arrangement requests
Parental leave and related entitlements
Personal/carer’s and compassionate leave and unpaid family and domestic violence leave
Community service leave
Long service leave
Notice of termination and redundancy pay
Fair Work Information Statement and Casual Information Statement
Who Do Modern Awards Apply To?
Modern awards may apply to all employees covered by the national workplace relations system. However, not all employees are award covered. For example, employees may be covered by a registered or enterprise agreement or employees may not work in an industry or occupation covered by the modern award system.
What if An Award Doesn't Apply?
Where there is a registered agreement such as an enterprise agreement, it will usually apply instead of the applicable modern award. Employees covered by an award or registered agreement are entitled to the minimum pay rates, penalty rates and allowances set out in their award or agreement. Some employers and employees will not be covered by an award or enterprise agreement. For example, managers may not be covered by an applicable modern award and maybe award-free. If an employee is not covered by a modern award or registered agreement, they are considered to be award or agreement free. The NES and National Minimum Wage will set the minimum terms and conditions for award-free employees.
There are many different awards spanning most industries and occupations. This is to try and ensure that no matter what their job, employees experience consistently fair working conditions. Some examples of current modern awards include the following:
Aged Care Award 2010
Building and Construction General On-site Award 2020
Children’s Services Award 2010
Clerks – Private Sector Award 2020
Hair and Beauty Industry Award 2010
Hospitality Industry (General) Award 2020
General Retail Industry Award 2020
Real Estate Industry Award 2020
Manufacturing and Associated Industries and Occupations Award 2020
Miscellaneous Award 2020
Vehicle Repair, Services and Retail Award 2020
Your Employment Obligations
Where a modern award applies, you must give your employees at least the minimum pay and entitlements stipulated in the applicable modern award for the job that they do, the hours they work, and when they work them. It is important for you to recognise that there is potential for your business to be covered by more than one relevant modern award. For example, if you own a building company, your office administration staff may not be covered by the same modern award as your on-site labourers, and so they may have very different minimum entitlements and working conditions. You also need to take into account that the duties your employee performs, as well as the employee’s level of experience and qualifications, may impact on their classification level and corresponding minimum rate of pay under the relevant modern award. For example, if a physiotherapist is hired straight after graduating from university, their minimum award pay rate will be lower than the applicable modern award rate for an employee with five years of experience. As your employee progresses in their employment and gains more experience or qualifications, you should regularly review the employee’s classification level in light of the progression provisions in the applicable award to make sure you are still paying them the appropriate rate. With the recent minimum wage increase, it's crucial for employers to stay up to date with their employees' minimum entitlements to ensure compliance with the relevant modern award. Call us for free initial advice on modern awards, modern award coverage and applicable pay rates on 1300 651 415.
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Frequently Asked Questions
What Is The Purpose Of A Modern Award?
The purposes of a modern award is to provide minimum entitlements and employment conditions for a particular industry or occupation to ensure consistency and fairness.
What Does A Modern Award Cover?
Most modern awards have provisions regarding working conditions and entitlements in respect of:
- hours of work
- penalty rates
How Many Modern Awards Are There?
There are 121 modern awards that apply generally to a specific industry or occupation. These modern awards cover most employers in the national workplace relations system, but there are a few additional awards that apply only to specific employers and their employees.
What Are The Minimum Standards In Modern Awards?
These are the minimum pay rates and conditions of employment such as leave entitlements, overtime and shift work that apply to employees in a specific industry or occupation.
How Is Modern Award Coverage Determined?
Modern award coverage is determined in the first instance by the industry that the business operates in. However, if there is no relevant industry award, or the applicable industry award does not have classifications that cover the employee’s specific job and duties, then an occupational award may apply. If there is no occupational award, the employee may be award free.
Is Every Employee In Australia Covered By A Modern Award?
No. For example, employees may not fall under the national workplace relations system, or they may be covered by an enterprise agreement, or be award free.
What Kinds Of Modern Awards Are There?
There are 121 modern awards that apply generally to certain industries or occupations, and a small number of awards that apply to specific employers and their employees.
Can An Employee Be Covered By More Than One Award?
No. An employee can only be covered by one award with regards to their employment in a particular role. If more than one award appears to cover an employee, the employer should look to the industry award first to determine coverage. If the employer is covered by an industry award and that award contains a classification for the employee’s specific duties and qualifications the employee will be covered by the industry award. If the industry award does not have any classifications that fit the job the employee does, an occupational award may apply, or the employee may be award free.
What If Your Workplace Is Covered By An Enterprise Agreement?
If your business is covered by an enterprise agreement, then generally the terms of the agreement will apply over a modern award.
What Is The Difference Between An Enterprise Agreement And A Modern Award?
Modern awards are industrial instruments created, varied and reviewed by the Fair Work Commission to provide minimum entitlements and conditions for all employees working in certain industries and occupations. Enterprise agreements are employment conditions negotiated between an employer or group of employers and their employees to suit their needs.