19th May 2023

Understanding Modern Awards

Modern awards are complex, that’s for sure.


With hundreds pages tailored to an occupation or industry, it is difficult to determine which award applies to employees and their minimum entitlements. They are frequently updated to align with changes in legislation, court decisions, and community standards, making compliance challenging. Additionally, modern awards can be ambiguous, and variations in interpretation can create confusion. They are often written in a legal language that is difficult for non-legal persons to comprehend, and it may require legal experts to translate provisions into plain English.


So, lets try to break it down.


Overview of Employment Law
Employment law is a broad area of law that encompasses various aspects of the employment relationship. It includes both legislation and common law principles that regulate the rights and obligations of employers and employees.

Fair Work Act 2009 (Cth) is a crucial piece of employment law legislation for business owners to understand. The Act sets out the minimum terms and conditions of employment for most employees in the private sector through the National Employment Standards (NES).

Industrial Instruments (Modern Awards)
Apart from the Fair Work Act, there are other industrial instruments that can apply to businesses, including modern awards. Business owners need to be aware of the specific awards that apply to their employees and ensure that they remain compliant with their obligations.

Other Legal Obligations
As an employer, it is also important to be aware of other legal obligations that exist beyond employment law. These include obligations related to workplace health and safety, anti-discrimination laws, and privacy laws.


What is a Modern Award?
Modern awards are documents that outline the minimum employment terms and conditions for a particular industry or occupation. They cover areas such as pay, hours of work, and allowances. Employers must ensure compliance with any applicable awards for their employees. If no award applies, the National Employment Standards (NES) minimum standards must be followed. If an award applies and provides better entitlements than the NES, the employer must follow the award.

How do I know which Modern Award applies?

To determine the modern award that applies to your business, you should consider the industry in which your business operates, the type of work your employees perform, and the terms and conditions of employmen


You can use Fair Work Australia's 'Award Finder' tool which allows you to search based on job title and industry. If this doesn't work, you can find a full list of awards on the Fair Work website.


When you have narrowed down potential awards, you should look at two key sections to understand the application and scope of each award.

Coverage: The first section is the 'coverage' clause, which sets out which employers and employees are covered by the award and any exclusions. Job classifications: The second section is the 'job classifications' which determine an employee's minimum entitlements based on their level. If you're not sure which classification applies, it's best to use the more senior classification level to avoid underpayment.


It's important to know that more than one award may apply to your business, so an assessment should be completed for each role.


Myth: All Managers are Award free
There is a common misconception that all managers and professionals are not covered by awards. While it is true that many of them have historically not been covered, there are exceptions to this. It's important to carefully check the industry definition and job classifications of each award, as some managers and professionals may fall under their scope.


Myth: The Non-Award Clause in an Employment Contract Makes the Employee Award-Free

It's important to note that simply having a non-award contract does not necessarily mean that an employee is not covered by an award. In some cases, an award may apply regardless of the terms of the contract.


If an employee can prove that they fall under a particular modern award and are receiving less than the minimum entitlements stated in the award, the employer may be held liable for underpayment of wages. This means that the employer may be required to pay the employee the difference between what they have been paid and what they should have been paid according to the award.


Are Modern Awards applicable to managers and higher-income employees?

It's possible that managers or higher-income employees may not be covered by a modern award even if their industry has one.

Employees who earn a guaranteed annual income amount higher than the high income threshold are considered higher-income employees. For 1 July 2022 - 30 June 2023, this threshold is $162,000, and it includes non-monetary benefits but excludes payments that can't be calculated beforehand, like commissions and overtime, as well as statutory superannuation contributions. This amount changes each year.


Still unsure?
If you need assistance with determining whether a modern award applies to your business, you can contact Fair Work Australia at 13 13 94 for support. However, if you are still confused or unsure even after consulting with Fair Work or conducting your own assessments, it is recommended that you seek advice from a lawyer to avoid any potential errors. It is important to get this right.


We can help

Standard Candle HR can offer valuable assistance to businesses to understand and intepret modern awards. We offer a range of services, from award assessment and classification reviews, to compliance reviews and assistance with disputes. With our expert guidance, businesses can ensure that they are paying their employees correctly and complying with all relevant regulations. Additionally, we provide ongoing support to help businesses stay up to date with any changes to modern awards. By partnering with Standard Candle HR, businesses can have peace of mind knowing that they are operating in compliance with modern awards, while also keeping their employees happy and motivated.

Understanding Modern Awards

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