What is a Modern Award?

The first Modern Awards were created following an extensive review of industries and working conditions conducted by the Australian Industrial Relations Commission and came into existence on 1 January 2010 (subject to some phase-in provisions). There are currently 121 Modern Awards now overseen by the Fair Work Commission who are responsible for their maintenance and review.

A Modern Award sets out the pay rates and various terms and conditions of employment for a particular industry or occupation. These conditions are in addition to the minimum standards of employment set out in the National Employment Standards and include things such as:

  1. rates of pay (ordinarily set out by skill level);
  2. overtime and penalty rates;
  3. hours of work and rostering;
  4. industry allowances;
  5. leave; and
  6. breaks. 
Does a Modern Award Apply to Me?

Modern Awards apply to all employees covered by the National Workplace Relations System, specifically to National System Employees in the particular industry or occupation that the Modern Award relates to.

A National System Employees is an individual who is employed, or usually employed by a National System Employer.[1] Section 14 of the Fair Work Act 2009 (Cth) (FWA) defines a National System Employer to include:

  1. a constitutional corporation, so far as it employs, or usually employs, an individual; or
  2. the Commonwealth, so far as it employs, or usually employs, an individual; or
  3. a Commonwealth authority, so far as it employs, or usually employs, an individual; or
  4. a person so far as the person, in connection with constitutional trade or commerce, employs, or usually employs, an individual as:
    • a flight crew officer; or
    • a maritime employee; or
    • a waterside worker; or
  5. a body corporate incorporated in a Territory, so far as the body employs, or usually employs, an individual; or
  6. a person who carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person employs, or usually employs, an individual in connection with the activity carried on in the Territory.[2]

This definition typically captures most employers in Australia.

Notwithstanding this, if a business is covered by a registered agreement (such as an Enterprise Agreement), the conditions of the Modern Award may not be relevant except as they relate to pay rates if the rates in the Modern Award are higher than the agreement.

Where there is no Modern Award for an industry or that captures a particular occupation, that employee will not be covered by a Modern Award. In some circumstances management roles or higher income employees may not covered by a Modern Award even if there is an applicable Modern Award in the industry within which they work. It is important to correctly identify these employees as the consequences for misidentifying them and not applying the provision of the Modern Award can be severe. In all these exemptions, the National Employment Standards still apply.

Non-Compliance with Modern Award

It is essential that both employees and employers keep up to date with the applicable Modern Award, for example to ensure minimum wage requirements are being met.

Failure to comply with a Modern Award can result in substantial penalties for the employer as well as possible liabilities to the employee (for example payment of back pay for underpayment).

In failing to obtain advice and ensure mechanisms are in place for compliance with the Modern Award an employer runs serious risk of penalties. It is for this reason that employers are encouraged to obtain advice on their Modern Award and assistance in ensuring compliance. Investing in proper advice and assistance early in the piece can save time, resources and money in the future.

If you are an employer or employee and you require assistance with Modern Awards, Adams & Partners Employment Law Team can assist you in ensuring you understand the applicable award and employment agreements and conditions meet the required standards. Contact us on (02) 4721 6200.

[1] Fair Work Act 2009 (Cth), s 13.

[2] Fair Work Act 2009 (Cth), s 14.

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