Modern Awards

Modern Awards

What are Modern Awards?

Under the Fair Work Act, modern awards, along with the National Employment Standards (‘the NES’), form the national safety net of employment terms and conditions across Australia.

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.

Different employees are covered by different modern awards, depending on their industry and/or occupation. If no modern award covers the employee’s job, they are “award free”. An updated list of modern awards can be found at www.fwc.gov.au.

Modern awards are also used as a reference instrument to decide whether a proposed enterprise agreement passes the “better off overall test”. If there is an applicable enterprise agreement in operation, the terms of the enterprise agreement will displace those in the modern award for the duration of the enterprise agreement.

What’s in a Modern Award?

Modern awards can contain 10 minimum standards in addition to the NES (see section 139 of the Fair Work Act). These minimum standards are:

  • minimum wages, including skill-based classification;
  • type of employment (full-time, part-time, or casual);
  • arrangement 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.

Flexibility Terms

Modern Awards also include a flexibility term. Such a term allows an employer and employee to reach an arrangement to vary the effect of a modern award to meet the genuine requirements of the parties. An employee must be better off overall on the flexibility arrangement than under the terms of the relevant modern award. The flexibility arrangement must be in writing and signed by each party.

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.

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