Understanding modern awards
Modern awards are legal documents that set out the minimum terms and conditions of employment, supplementing the National Employment Standards (NES). They were introduced on 1 January 2010 and cover a range of entitlements such as pay, hours of work, rosters, breaks, allowances, penalty rates, and overtime. The purpose of these awards is to ensure a fair and equitable baseline for employment conditions across various industries and occupations.
These awards apply universally to all employees who are part of the national workplace relations system. They are categorised based on specific industries or occupations, ensuring relevance and applicability to the particular work being performed. However, it's important to note that certain groups of employees, like managers or those earning a higher income, may not fall under any modern award, even if it applies to their industry.
There are situations where modern awards may not be applicable. For instance, if a business is governed by a registered agreement, the conditions of the relevant modern award might not apply. However, if the base rates in an agreement are lower than those in the modern award, the award's rates will prevail. Also, employees not covered by an award or agreement are considered 'award and agreement free', meaning the National Minimum Wage and NES become their primary terms of employment.
As a business owner, it's important to:
- Determine the correct modern award(s) applicable to your employees.
- Ensure compliance with all provisions of the relevant modern awards.
- Regularly review and stay updated on any changes to modern awards that may affect your business operations.
It's important to note that modern awards can be complex, and different awards may apply to various roles within your business. Regular consultation of the Fair Work Commission's resources and seeking professional advice can support you in navigating these awards in your business.
What is a modern award?
Modern awards are a cornerstone of the Australian workplace relations framework, defining the minimum entitlements for employees based on their job roles. These awards vary depending on the industry or occupation, and the specific entitlements applicable to an employee are influenced by several factors:
- Employment type. Full-time, part-time, or casual employment statuses can influence the entitlements.
- Qualifications and experience. The level of an employee's skills and experience can affect their entitlements under the award.
- Job duties. The specific tasks and responsibilities an employee undertakes can determine which award applies.
- Work schedule and location. The hours and location of work can also play a role in defining the relevant award.
Key entitlements outlined in modern awards include aspects such as pay rates, hours of work, overtime and penalty rates, allowances, rostering, breaks, and specific leave provisions tailored to the industry or occupation. Importantly, these entitlements must align with or surpass the national minimum wage and the National Employment Standards (NES), which set out 11 fundamental employment standards. These standards cover areas like maximum weekly hours, various leave types (including parental and personal leave), public holidays, and termination notice.
For casual employees, there might be variations in the entitlements received, given the nature of casual employment. Understanding which modern award applies to your employees and the specific entitlements they are eligible for is essential for employers to ensure compliance and fair treatment of their workforce.
Who do modern awards apply to?
Modern awards in Australia's national workplace relations system are tailored to cover employees based on specific industries or occupations. These awards provide a set of minimum terms and conditions of employment, ensuring that employees in various sectors receive fair and consistent treatment in their workplaces.
The scope of modern awards is notably industry- or occupation-based. This means that they are designed to apply to particular sectors like healthcare, retail, construction, or education, or to certain types of jobs like clerical work, trades, or professional roles. This targeted approach ensures that the unique needs and characteristics of different industries and occupations are adequately addressed.
For employees and employers engaged in work that falls under a particular award, these standards become a crucial part of their employment terms. Modern awards typically outline vital aspects such as pay rates, working hours, overtime and penalty rates, allowances, rostering, breaks, and specific leave entitlements relevant to the industry or occupation.
The aim of these awards is to provide a safety net of minimum conditions for employees, which complements the National Employment Standards (NES). They serve to enhance the NES by providing additional, industry- or job-specific entitlements, thereby ensuring a comprehensive and fair employment framework for various sectors of the Australian workforce.
When modern awards don't apply
However, it's important to note that not all employees are automatically covered by a modern award. In cases where no modern award or registered agreement applies, employees are considered 'award or agreement free.' While they won't receive the specific entitlements of an award, they are still protected by the National Employment Standards (NES) and the National Minimum Wage, ensuring fundamental employment conditions are met.
This can depend on several factors:
- Registered or enterprise agreements where employees who are covered by registered agreements, such as enterprise agreements, may not be governed by a modern award. These agreements typically outline specific terms and conditions of employment and take precedence over modern awards.
- Specific industries or occupations may not have a corresponding modern award. In these cases, employees in these areas might not be covered by any modern award.
- Managers and higher income employees in managerial positions or those who earn above a certain income threshold may not be covered by a modern award, even if one exists for their industry.
Understanding whether a modern award applies to an employee or a group of employees can be complex. It's important for employers to accurately identify if a modern award applies to their employees, as this impacts the terms and conditions of employment, including pay rates, working hours, and other entitlements.
Common awards
Australia's modern award system spans a wide range of industries and occupations, ensuring fair working conditions across various sectors. Some of the key modern awards include:
- Aged Care Award 2010 covers employees in the aged care sector, focusing on their specific employment needs.
- Building and Construction General On-site Award 2020 is for workers in on-site construction roles, reflecting the unique nature of the industry.
- Children’s Services Award 2010 addresses the entitlements for those working in children's services.
- Clerks – Private Sector Award 2020 covers clerical and administrative employees in the private sector.
- Hair and Beauty Industry Award 2010 is for professionals in the hair and beauty industry.
- Hospitality Industry (General) Award 2020 is for employees in various roles within the hospitality sector.
- General Retail Industry Award 2020 is applicable to employees working in retail settings.
- Real Estate Industry Award 2020 is designed for those employed in the real estate industry.
- Manufacturing and Associated Industries and Occupations Award 2020 covers a broad range of roles within manufacturing and associated industries.
- Miscellaneous Award 2020 is a more general award for occupations not covered by other specific awards.
- Vehicle Repair, Services and Retail Award 2020 is for employees in vehicle repair, services, and retail.
Each of these awards caters to the unique requirements of their respective fields, ensuring that employees receive fair and appropriate working conditions and entitlements.
Employer obligations
Under the framework of modern awards, employers have specific obligations to ensure fair pay and conditions for their employees. This includes:
- Minimum pay and entitlements. Employers must provide at least the minimum pay and entitlements stipulated in the applicable modern award. These entitlements are based on the job role, working hours, and timing of the work.
- Multiple award coverage. Businesses might fall under more than one modern award, especially if they have a variety of job roles. For instance, in a building company, office staff and on-site workers may be covered by different awards.
- Employee classification and pay progression. The duties, experience, and qualifications of an employee can influence their classification under a modern award. This classification, in turn, affects their minimum rate of pay. Regular reviews are necessary to ensure that pay rates remain appropriate as employees gain experience or qualifications.
- Staying updated with changes such as minimum wage increases, it's crucial for employers to stay informed about the current minimum entitlements to maintain compliance with modern awards.
Employment Compass offers guidance and advice on these obligations, ensuring employers meet their legal responsibilities. For assistance, contact our 24/7 Employer Help Line at 1300 144 002.
Frequently asked questions
What Is the purpose of a modern award?
Modern awards are integral to the Australian workplace relations framework. They establish minimum employment conditions for employees in different industries and occupations. The purpose of modern awards is to ensure equitable pay and working conditions across various sectors by reflecting the distinct needs and characteristics of different fields.
What does a modern award cover?
Modern awards cover a range of key employment terms and conditions. These include minimum wage rates, working hours, overtime and penalty rates, allowances, different types of leave, and other specific conditions pertinent to an industry or occupation. The objective is to provide a safety net that aligns with or surpasses the National Employment Standards (NES).
How many modern awards are there?
The Fair Work Commission manages a diverse and large number of modern awards, covering a broad spectrum of industries and occupations across Australia. Each award is tailored to the specific needs of its respective sector, ensuring fair and appropriate working conditions for employees engaged in different types of work.
What are the minimum standards in modern awards?
The minimum standards set in modern awards include, but are not limited to, wage rates, working hours, overtime and penalty rates, allowances, and various types of leave (such as annual, personal, and compassionate leave). These standards are designed to align with the National Employment Standards (NES), providing a baseline of entitlements.
How is modern award coverage determined?
Coverage under a modern award is determined based on several factors, including the industry or occupation of the employee, their specific job duties, qualifications, experience, and the conditions under which they work. This tailored approach ensures that the unique aspects of different types of work are adequately addressed within the national workplace relations system.
Is every employee in Australia covered by a modern award?
Not all employees in Australia fall under the coverage of a modern award. Some employees may be governed by enterprise agreements, or their roles may not align with any specific award category. These employees are considered 'award and agreement free', with the National Minimum Wage and the National Employment Standards serving as their primary terms of employment.
What kinds of modern awards are there?
Modern awards in Australia span various sectors, including aged care, construction, clerical work, hospitality, retail, manufacturing, and more. Each award caters to the specific requirements of its respective field, ensuring fair treatment and appropriate working conditions for employees engaged in those industries.
Can an employee be covered by more than one award?
Depending on their job roles and responsibilities, an employee may be covered by more than one modern award. This is particularly relevant in workplaces where employees perform multiple roles that span different industry sectors or occupational categories.
What if your workplace is covered by an enterprise agreement?
If an enterprise agreement is in place at a workplace, it generally takes precedence over the relevant modern award. Enterprise agreements are tailored to the specific conditions of a particular workplace, setting out terms and conditions of employment agreed upon by the employer and employees.
What is the difference between an enterprise agreement and a modern award?
An enterprise agreement is a custom agreement that applies to a particular workplace or group of workplaces. It is developed through negotiation between the employer and employees and is tailored to the specific needs of that workplace. Whereas a modern award is a standard set of minimum conditions for an industry or occupation, established by the Fair Work Commission to apply broadly across relevant sectors.