Modern Awards

Today, we look at modern awards.

Sometimes overlooked, modern awards are important sources of terms and conditions for thousands of employees throughout Australia. In many industries and professions, the modern award will set the minimum conditions of employment. It is important that you are aware of what a modern award is, whether it might apply to you and what can be done if the modern award is not complied with?

What is an Award?

A modern award is an instrument made by the Fair Work Commission. A modern award sets minimum terms and conditions which apply on top or in conjunction with the National Employment Standards.

Modern awards will contains matters such as minimum wages, classification structures, hours of work, penalty rates, overtime rates, allowances for things such as expenses that might be incurred in employment or allowances payable for additional responsibilities and skill, leave loadings, and consultation and dispute resolution procedures.

Modern awards impose obligations on employers and employees.

How can I tell if an Award applies to me?

The Fair Work Commission maintains a list of modern awards on its website. Most modern awards are organised on the basis of industry and occupation. You will often find at the commencement of modern awards a coverage clause. That is your first step in determining whether the modern award might apply to your employment. You often need to review and interpret the coverage clause of a modern award to ensure that it applies to your employer and the particular type of work that you perform for your employer. This can often involving reviewing the classification structure of the modern award.  This can be quite a complex task at times and there are plenty of cases where parties have been in dispute about whether the modern award applied or not.

If you are covered by an enterprise agreement then technically the modern award will not apply to your employment whilst the enterprise agreement is in operation. This does not mean, however, that your rate of pay can dip below the relevant modern award classification and there are plenty of enterprise agreements which will incorporate the terms from the modern award. This is a complicated issue and is for another blog post but if an enterprise agreement applies to you then you might want to take some advice about the relevance of the modern award!

Senior Executives beware

Often senior executives are asked to sign on to what is referred to as a guarantee of annual earnings. In short, a guarantee of annual earnings is a written undertaking given to an employee by the employer undertaking to pay the employee an amount higher than the high income threshold (which, at 1 July 2021 is $158,500). There are particular steps which an employer must meet to give an effective guarantee of annual earnings but if a valid one is offered and accepted by an employee then the modern award will no longer apply to that employee for as long as the guarantee is effective (it will continue to apply for unfair dismissal eligibility purposes).

You should always consider and take advice about what you might be giving up by accepting a guarantee of annual earnings.

Why is a modern award important?

Because modern awards set minimum terms and conditions in conjunction with the National Employment Standards, modern awards provide a base level of entitlements for employees. A failure to comply can be costly and result in substantial penalties, negative publicity and compensatory orders.

We are often asked for legal advice in circumstances where the contract sets a rate of pay which is less than the minimum which applies under the modern award. What often occurs, especially for long term employment arrangements, is that the rate of pay which was set at the start of employment has not kept up with improvements in the modern award over time with the result being that an employee is now being underpaid against the modern award. The employee is entitled to seek compensation in those circumstances. It is why it is important for both employers and employees to keep an eye on movements in the modern award to ensure that contracts are up to date and not falling below those minimum standards set by the modern award. This helps to avoid that difficult and often headline grabbing issue of underpayments.

Another common scenario is where the modern award sets conditions around hours of work, overtime and penalty rates. The contract might say something completely different to the modern award and often disputes arise about whether the employee has been underpaid against the modern award.

AEN Legal

AEN Legal have successfully advised on the application and interpretation of modern awards. We have acted in proceedings seeking to recover entitlements and can assist those seeking to under how a modern award might apply and what entitlements and obligations might flow from having a modern award apply to employment.  

Our fees for representation are flexible and we offer both time-based costing, project and fixed fee arrangements. This allows you to have certainty around your legal costs. We are always happy to discuss legal costs with you. We will disclose all of our costs up front, so you make an informed decision.

If you think you need advice or assistance concerning a modern award issue, please get in touch with us today on 0415991191 and speak with Aron Neilson.