Awards: The Fair Work Act and modern awards
What are awards?
Awards have a central role in the industrial relations system under the Fair Work Act 2009 (Cth) (‘FW Act’).
An ‘award’ is an enforceable document that provides a safety net of minimum terms and conditions of employment, along with the National Employment Standards (see ‘National Employment Standards’).
In general, an award applies to employees in a particular industry or occupation.
Awards are also used as a reference instrument to decide whether an agreement passes the ‘no disadvantage test’ (used before 1 July 2009) and the ‘better off overall test’ (used after 1 July 2009).
A breach of an award can lead to prosecution by authorities in addition to potential civil action.
From 1 January 2010, new modern awards and the National Employment Standards (NES) replaced the old awards.
The old awards no longer apply to any employees or operate for any other reason under the FW Act. Except when the old awards are used as a historical reference or are expressly, or by deeming, incorporated into modern awards, into the NES, or into enterprise agreements.
Modern awards have reduced the overall number of awards by combining the coverage of a number of awards into one award.
Modern awards and high-income earners
Modern awards do not apply to employees on high incomes.
The FW Act defines a high-income earner as an employee who has a written guaranteed income, accepted by the employee, of greater value than the amount set by regulations. As at 1 July 2022, the amount set by the regulations is $162 000 for full-time workers.
Note that employees are not excluded solely because of the level of their income; they must also have a written and accepted guarantee of a specified income to be excluded from award coverage (see ss 47(2), 329–333 FW Act).
The 10 minimum standards
Modern awards can contain 10 minimum standards in addition to the NES (s 139 FW Act).
These minimum standards are:
- minimum wages, including skill-based classification;
- type of employment;
- arrangement of work, including hours, rosters, consultation about changes to rosters and breaks;
- overtime rates of pay;
- penalty rates, including for shift, weekend 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 must include a flexibility term.
A flexibility term helps an employer and employee to reach an arrangement to vary the effect of particular terms of an 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 award.
The flexibility arrangement must be in writing and signed by each party.
Modern awards may include terms relating to outworkers, industry specific redundancy schemes (e.g. the construction industry redundancy fund) and incidental and machinery terms (see ss 140–142 FW Act).
Modern awards may also provide additional detail of the National Employment Standards required for the specific industry.
As part of the award-modernisation task, the Australian Industrial Relations Commission (now called the Fair Work Commission) created a default award, which applies to all non-managerial employees who are not covered by a modern award.
Which award applies to my job?
Determining whether a federal award applies to a job, or which award applies, is not always easy.
The best source of information for union members is their union, which will be familiar with the awards within its industry.