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Modern Awards

This modern award guide explains their purpose, coverage, and employer obligations for Australian businesses, ensuring employment law compliance.

Table of contents

What are modern awards?

Modern awards are legal documents that outline the minimum terms and conditions of employment for employees in specific industries or occupations. They work in conjunction with the National Employment Standards (NES) to provide a comprehensive framework for fair work practices in Australia.

The NES outlines 11 minimum standards of employment that apply to all employees in the national workplace relations system, regardless of whether they are covered by an award or registered agreement. These standards include:   

  1. Maximum weekly hours
  2. Requests for flexible working arrangements
  3. Parental leave and related entitlements
  4. Annual leave
  5. Personal/carer's leave, compassionate leave, and unpaid family and domestic violence leave
  6. Community service leave
  7. Long service leave
  8. Public holidays
  9. Notice of termination and redundancy pay
  10. Fair Work Information Statement
  11. Casual Employment Information Statement

Introduced in 2010, modern awards cover various aspects of employment, supplementing the NES with industry or occupation-specific conditions. These include:

  • Pay rates
  • Hours of work
  • Rosters
  • Breaks
  • Allowances
  • Penalty rates
  • Overtime

Modern awards ensure that employees receive fair and equitable treatment by setting a baseline for employment conditions. As an employer, it's important to understand which modern award(s) apply to your business and how to comply with their provisions.

Why are modern awards important?

Modern awards play a key role in promoting fair work practices and ensuring compliance with Australian employment law. Here's why they are essential for your business:

✔ Modern awards are a key part of the Fair Work Act 2009, and adhering to them is a legal requirement. Non-compliance can lead to penalties, fines, and reputational damage.

✔ By providing a safety net of minimum entitlements, modern awards contribute to employee satisfaction and a positive workplace culture. When employees feel secure and valued, they are more likely to be productive and engaged.

✔ Modern awards can help businesses build a positive reputation as an employer committed to fair work practices. This can be a significant advantage in attracting and retaining talent.

✔ Modern awards create a level playing field for businesses within the same industry, ensuring fair competition and preventing exploitation of workers.

✔ By clearly outlining employment conditions, modern awards can help minimise workplace disputes and disagreements.

✔ Modern awards help prevent employee burnout by setting standards for working hours, breaks, and overtime. This promotes a healthy work-life balance and protects the well-being of employees.

Which modern award applies?

With over 120 modern awards covering various industries and occupations, identifying the correct one(s) for your business can seem daunting. Here's a step-by-step guide to help you.

Which modern award applies?


Begin by identifying the primary industry your business operates within. For instance, a retail store falls under the retail industry, while a café belongs to the hospitality industry.

This initial step helps narrow down the potential modern awards that might apply to your business.


Each modern award includes a "coverage clause" outlining the employers and employees it covers. This clause specifies the types of businesses and job roles within the award's scope.

Carefully review this clause to confirm its relevance to your business and employees.


Modern awards have classifications based on factors like employee duties, qualifications, and experience. These classifications determine minimum pay rates and entitlements.

Ensure accurate employee classification by considering their job responsibilities, skills, and experience level.


The Fair Work Commission uses the "principal purpose test" to determine if an employee falls under a specific classification.

This test assesses the nature of the work performed and the main reason for employment, going beyond just the time spent on different tasks to focus on the core purpose of the role.


If uncertainties persist regarding the applicable modern award, seek guidance from the Fair Work Ombudsman or an HR professional.

They can provide expert assistance in interpreting award coverage clauses and classifying employees correctly.

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It's important to note that some of the most common modern awards in Australia include:   

  • General Retail Industry Award 2020
  • Social, Community, Home Care and Disability Services Industry Award 2010
  • Hospitality Industry (General) Award 2020
  • Fast Food Industry Award 2010
  • Restaurant Industry Award 2020

Modern awards and enterprise agreements

In some cases, an employer and their employees may be covered by an enterprise agreement instead of a modern award. An enterprise agreement is a negotiated agreement that sets out the terms and conditions of employment for a specific workplace or group of employees.

If an enterprise agreement applies to your business, it will generally supersede the relevant modern award. However, it's crucial to ensure that the base rates of pay in the enterprise agreement are not lower than those in the applicable modern award. If the agreement's pay rates are lower, the modern award rates will apply.

Modern awards and high-income employees

While modern awards cover a wide range of employees, some high-income employees may be excluded. A high-income employee is someone who earns an annual income above a certain threshold (currently $175,000 as of 1 July 2024).

While these employees may have the ability to negotiate higher salaries, it's important to consider the potential implications of being excluded from a modern award. This may affect their access to certain entitlements and protections provided by the award, such as those related to working hours, overtime, and redundancy.

Key entitlements under modern awards

Modern awards provide a range of minimum entitlements for employees, ensuring fair and consistent treatment across various industries. These entitlements are summarised in the table below:

Entitlement Category Description Examples
Minimum Wage Modern awards specify minimum pay rates for different classifications of employees. These rates cannot be less than the national minimum wage and are subject to annual review. The minimum hourly rate for a Level 2 employee under the General Retail Industry Award 2020.
Hours of Work Modern awards outline the ordinary hours of work for employees, including rules around overtime, breaks, and rostering. An employee under the Hospitality Industry (General) Award 2020 is entitled to a 10-minute paid rest break for every four hours of work.
Leave Entitlements Modern awards provide for various types of leave, including annual leave, personal/carer's leave, and compassionate leave. An employee under the Clerks – Private Sector Award 2020 is entitled to four weeks of paid annual leave per year.
Allowances Modern awards may include allowances for specific expenses related to the job, such as travel, uniform, or tools. An employee required to wear a uniform may be entitled to a uniform allowance under the relevant modern award.
Penalty Rates Modern awards prescribe penalty rates for work performed outside of ordinary hours, such as weekends, public holidays, or overtime. An employee working on a Sunday may be entitled to a penalty rate of 150% of their ordinary hourly rate under the applicable modern award.

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Legal obligations and penalties

As an employer, you have legal obligations to comply with the relevant modern award(s) that apply to your business. This includes:

✅ Ensure that you pay your employees at least the minimum rates of pay and provide all entitlements outlined in the applicable modern award. This includes paying the correct penalty rates, allowances, and leave entitlements.

✅ Accurately classify your employees based on their duties and responsibilities to ensure they receive the correct pay and entitlements. Regularly review employee classifications to ensure they remain accurate.

✅ Maintain accurate records of employee hours, pay, and leave in accordance with record-keeping requirements. This includes keeping records of timesheets, pay slips, and leave applications.

✅ Issue pay slips to employees that meet the legal requirements, including information on pay rates, hours worked, and deductions. Pay slips must be provided to employees within one working day of pay day.

✅ Keep abreast of any changes to modern awards, such as minimum wage increases or variations to award conditions. Subscribe to email updates from the Fair Work Ombudsman to stay informed.

Failing to comply with modern awards can result in severe penalties, including:

❌ Substantial fines can be imposed on businesses for breaching modern award provisions. The amount of the fine can vary depending on the severity of the breach.

❌ Higher penalties apply to "serious contraventions" of modern awards. These occur when an employer knowingly contravenes an award, and the contravention is part of a systemic pattern of conduct.

❌ Employers may be required to back-pay employees any underpaid wages or entitlements, including superannuation and interest.

❌ Employees can seek compensation for any loss suffered due to a breach of a modern award. This may include compensation for lost wages, emotional distress, or other damages.

❌ Non-compliance can damage your business's reputation and make it difficult to attract and retain employees. Negative publicity and legal action can harm your brand image and affect yourrelationships with customers and stakeholders.

❌ Misrepresenting an employee's award coverage can also attract penalties. This highlights the importance of accurately classifying employees and ensuring they are covered by the correct modern award.

Final thoughts

Modern awards are key to creating a fair and equitable workplace in Australia. They provide a framework that ensures employees are treated with respect by setting minimum employment standards. For small and medium business owners, understanding and complying with modern awards is not only a legal requirement but also a crucial step in building a positive and productive work environment.

If you need further assistance with “Modern Awards” or other HR matters, our 24/7 Advice Line is available to all Australian business owners. Contact us on 1300 144 002 today for expert advice and support tailored to your business needs.

Frequently asked questions

Modern awards are determined by the Fair Work Commission, an independent tribunal. They conduct research, consult with employers and employees, and consider submissions before making or varying an award.

The process aims to balance the needs of both employers and employees while ensuring fair minimum standards.
Modern awards cover a range of employment conditions, including minimum wages, hours of work, leave entitlements (annual leave, sick leave, etc.), penalty rates for work outside standard hours, allowances for specific expenses, and other conditions like breaks and rest periods.

They provide a baseline of minimum entitlements for employees.
Modern awards are industry or occupation-specific, meaning there are different awards for different industries (like retail, hospitality, or manufacturing) and occupations (like clerical work or nursing).

They apply to employers and employees within that specific industry or occupation who are not covered by an enterprise agreement.
The modern award system was introduced as part of the *Fair Work Act 2009*.

They replaced the previous system of awards and agreements, aiming to simplify and modernise workplace relations in Australia.
Modern awards provide a safety net of minimum entitlements. Enterprise agreements are agreements made at the enterprise level between an employer and its employees (usually negotiated by unions).

An enterprise agreement can offer better terms and conditions than the relevant modern award, but it cannot provide less than the modern award. If an enterprise agreement exists, it generally overrides the modern award.
Modern awards are vital for establishing fair minimum standards in Australian workplaces. They protect employee rights, ensure a level playing field for businesses, and contribute to a more equitable and balanced employment landscape. They are a fundamental part of the Australian workplace relations system.

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