Some roles within your business might be covered by a modern award and it is important to know what your obligations are for those awards.
This is especially important during the recruitment and selection process when employers need to know what award applies at the offer stage.
A modern award is a document which sets out the minimum terms and conditions of employment on top of the National Employment Standards (NES).
There is no doubt that modern awards are written in a way that is confusing and complex. However, compliance with award conditions of employment and the National Employment Standards (NES) is vital for any business.
What does a modern award cover?
Modern awards provide entitlements such as:
• Rate of Pay including penalty rates and overtime
• Hours of work and breaks
• Leave entitlements and loadings
Who is covered by a modern award?
Modern awards are industry or occupation-based, and apply to employers and employees who perform work covered by the award. There are more than 100 industry or occupation awards that cover most people who work in Australia.
Managers or higher income employees may not be covered by a modern award even if one applies to the industry in which they work.
You can find out which modern award applies using Fair Work Ombudsman Award Finder Tool.
When modern awards don’t apply
Some employers and employees will not be covered by a modern award. In these situations, the National Minimum Wage and the NES will form the minimum terms and conditions of employment.
Keeping up to date
All employers and employees are responsible for keeping up-to-date with the modern awards, any associated transitional arrangements, and future changes, for example, to the annual minimum wage.
How do I interpret modern awards appropriately?
The specifics of each award will differ, however all are divided into six sections:
1. Application and Operation of Award; outlines the date the award is effective, types of roles which are covered and specific definitions.
2. Consultation and Dispute Resolution; provides further information around the consultation process for change and handling disputes about a matter under the award or in relation to NES.
3. Types of Employment and Termination of Employment; refers to specific conditions for full time, part time or casual employees and how to handle termination or redundancy.
4. Minimum Wage, Classifications and Related Matters; refers to specific rates of pay for annualised salaries, juniors, allowances, accident make up pay, training wages including apprenticeship and traineeship, payment of wages and superannuation.
5. Hours of Work and Related Matters; provides further information on ordinary hours of work other than shift workers, breaks both meal and rest, as well as overtime and penalty rates.
6. Leave and Public Holidays; outlines different types of leave available and the amount of entitlement as well as access to unpaid leave.
So, you can see why modern awards can be perplexing – there is a lot to consider. Compliance with modern awards is further complicated when your business employs a wide range of staff across casual, part-time and full-time contracts under varying awards. This means that each employee could be on a different wage, with different levels of leave, overtime and penalty rates applicable.
Awards and legislation provide a framework for employee terms and conditions of employment. Small Business Society can provide advice on identifying and interpreting awards applicable to your business.
The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.
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About Kate Tongue
Kate Tongue is the founding Director of Small Business Society.
She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.
Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.
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