In today's business landscape, understanding the nuances of industrial awards is crucial for both employers and employees alike.  Many employers are unaware that modern awards are a legal requirement, and not an optional choice.

Below, we will debunk 5 common myths surrounding industrial awards:

1. Myth: Employers can opt out of industrial awards.
Reality: Modern awards are mandated by law. While an employer might decide not to specify award alignment in the employment contract or even choose to disregard an award entirely, this doesn't exempt them from its requirements. If an individual can demonstrate that their position falls under an award classification and, more significantly, that they're being paid less than the award, the employer could be held responsible for misclassification and obligated to adhere to the award conditions.

2. Myth: Common law contracts override awards.
Reality: Common law contracts must comply with the National Employment Standards (NES) and relevant awards.

3. Myth: Paying above award rates exempts employers from paying overtime or penalty rates.
Reality: While paying above award rates is permissible, employers must:

a.      Guarantee that employees receive equal or higher total compensation compared to the relevant award for all hours worked.

b.      Include a suitable "offset" clause in the employment contract.

c.      Maintain accurate timekeeping records.

d.      Adhere to award regulations concerning non-financial aspects like rest breaks.

4. Myth: Record-keeping is not required if paying above award rates.
Reality: Employers are obligated to maintain payroll and financial records showcasing payments exceeding award rates. Additionally, they must conduct a reconciliation or comparison with the award every 12 months to verify the absence of underpayments.

5. Myth: You only need to make sure you pay above the award.
Reality: The award not only governs wages, but will have specific requirements regarding hours of work, span of hours, breaks, annual leave loading, consultation, dispute resolution etc. When an award applies, all conditions must be adhered to.

What are the next steps?
Compliance with the right modern award is vital for employers to evade Fair Work Commission penalties. Determining the appropriate award classification is not an exact science, and it relies on practical judgment and assessment.

Begin by identifying your industry and then review the award's coverage clause to confirm its applicability to your business.

If a specific industry award is not applicable to a particular situation, it's possible that an occupational award, which focuses on the specific job or role rather than the industry as a whole, could be relevant and apply instead. Next, compare the award's classification structure with the position description to find the most suitable classification level for the role.

Need a more comprehensive review? Reach out to Standard Candle HR today for expert assistance in navigating the complexities of industrial awards.