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As part of your responsibilities as an employer, you’ll need to get your head around the modern award system.
A modern award (or simply ‘award’) is a government-mandated set of expectations around employment conditions, such as pay. An award factors in the industry and type of employment. The Fair Work Ombudsman is responsible for outlining what a modern award is and how it’s applied.
There are over 100 different modern awards in Australia, all targeted toward different industries with each laying out job-specific standards and expectations.
To avoid penalties and legal entanglements in your payroll undertakings, as an employer, it’s vital you understand which awards apply to your business, and ensure you comply with them. Let’s dig into the details.
What is a modern award?
A modern award is a documented set of guidelines that lay out the minimum employee standards and requirements in certain industries and roles. Dictating basic employment requirements including pay and conditions, the modern award standards are set in addition to other requirements such as the National Employment Standards (NES).
So what minimum standards are included in a modern award?
- rates of pay
- hours of work
- rosters
- overtime
- breaks
- penalty rates
Of course, while you can always pay your staff more, or give more breaks or perks, you cannot violate the minimum standards of employment as laid out by a modern award.
Who is covered by a modern award?
Not every employee is covered by a modern award. Modern awards do apply, however, to all employees covered by the national workplace relations system.
Modern awards are occupation, industry, and role-based. However, many managers or higher-paid employees, may not be covered despite being in a relevant industry.
Modern awards list
In Australia, there are more than 100 modern awards for industries ranging from Aged Care to Wool Storage. Each award has different definitions, minimum wages, and applicable practices related to the particular industry.
Accounting for more than 44% of employees under awards, the five most common modern awards are:
- General Retail Industry Award 2020
- Social, Community, Home Care and Disability Services Industry Award 2010
- Hospitality Industry Award 2020
- Fast Food Industry Award 2010
- Restaurant Industry Award 2020
To find a relevant modern award and see how they apply to you and your employees, you can view the entire awards list, or better yet, use the FairWork Ombudsman’s find my award tool.
Can an employer be covered by more than one modern award?
An employer can certainly have staff operating on several different modern awards.
For example, let’s say you run an automotive workshop repairing cars. Some of your mechanics may be on one modern award, an apprentice on a different modern award, and your office clerk would likely be on a different modern award again.
Just because your staff are part of the same business and in the same industry, they still operate on the most applicable modern award for their job type.
When modern awards don’t apply
A modern award does not apply to people outside of the industries laid out by the Fair work Ombudsman. They also don’t apply to those with separate agreements, higher-paid employees, or those in management positions.
In these instances, minimum standards of employment and pay still apply but may not be covered specifically by an award.
What if your workplace is covered by an enterprise agreement?
If you have an enterprise agreement in place, modern awards may not apply. An enterprise agreement is entered into by both employer and employee and generally supersedes the modern award.
(An enterprise agreement will set standards and pay higher than the base award and must pass a ‘Better off overall test’ to ensure it exceeds minimum award entitlements.)
What’s the minimum wage in Australia and how do awards change it?
Set by the Fair Work Commission, the National Minimum Wage in Australia changes each year. The minimum wage is set when there is no modern award applicable to the employee’s role, which would include a specified minimum wage within the award’s guidelines.
A modern award may include a minimum wage below or above the National Minimum Wage, although generally it will be above and won’t dip below unless in unique circumstances.
There are also different minimum wages for junior pay rates, apprentices or trainees, and employees with a disability.
As of 1 July 2023. the National Minimum Wage was set to $23.23 per hour or $882.80 per week.
