What are Modern Awards?

A modern award is a legally binding instrument which, along with the National Employment Standards (‘the NES’), sets out the base standards for the minimum terms and conditions of an employee’s employment.

From 1 January 2010, modern awards and the NES largely took the place of the former state/territory and federal awards, leading to a drastic reduction in the number of awards operating across the country. Currently, there are 122 modern awards operating across different industries and sectors in Australia. An updated list of modern awards can be found here.

Different employees are covered by different modern awards, depending on the employee’s industry and/or their occupation. Every modern award is required to contain a clause (which can usually be found towards the start of the award in clause 4) which states who is covered by the award. In one organisation, it may be that different employees may fall under different awards, as opposed to having everyone in the business being underneath the one award.

If no modern award covers an employee’s job, they are considered to be “award free”, however, the NES standards, including the minimum wage, will still apply as minimum standards of that worker’s employment.

What is in a Modern Award?

Modern awards will typically provide for 10 minimum entitlements owed to employees covered by the award. These entitlements are in relation to:

  • pay rates and minimum wages, including skill-based classification;
  • types of employment (full-time, part-time, or casual);
  • arrangements of work, including hours, rosters, consultation regarding changes to rosters and breaks;
  • overtime rates of pay;
  • penalty rates, including for shifts, weekends and public holidays;
  • annualised wage and salary arrangements;
  • allowances, including for expenses incurred, additional skills, responsibilities or disabilities;
  • leave, leave loading and arrangements for leave;
  • superannuation; and
  • procedures for consultation, representation and dispute settlement.

Modern awards may also deal with industry-specific entitlements and arrangements, such as the topic of commission-only pay arrangements in the real estate sector.

What happens if a Modern Award is breached?

A modern award sets out the minimum entitlements of employees. It is a civil penalty offence to breach an applicable modern award. Heavy fines and compensation may result. HR managers should remember that modern award rates of pay are varied at least as from 1 July each year.

Contact us for more information.