Awards: The Fair Work Act and modern awards
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Awards have a central role in the industrial relations system under the FW Act. An ‘award’ is an enforceable document that provides a safety net of minimum terms and conditions of employment, along with the NES (see ‘National Employment Standards’, above).
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 enterprise agreement passes the ‘no disadvantage test’ (used before 1 July 2009) and the ‘better off overall test’ (BOOT) (used after 1 July 2009).
A breach of an award can lead to prosecution by authorities in addition to potential civil action.
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From 1 January 2010, new modern awards and the NES replaced the old awards. The old awards no longer operate or apply to any employee, except when the old awards are used as a historical reference or are expressly, or by deeming, incorporated into modern awards or enterprise agreements.
Modern awards have reduced the overall number of awards by combining the coverage of a number of awards into one award.
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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 2024, the amount set by the regulations is $175 000 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 annual income, and notification that the modern award will no longer apply to them, to be excluded from award coverage (FW Act ss 47(2), 329–333).
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Modern awards can contain 10 minimum standards in addition to the NES (FW Act s 139). 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.
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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
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Modern awards may also include terms relating to outworkers, industry specific redundancy schemes (e.g. the construction industry redundancy fund) and incidental and machinery terms (FW Act ss 140–142). Modern awards may also provide additional detail of the NES required for the specific industry.
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As part of the award-modernisation task, the Australian Industrial Relations Commission (now called the Fair Work Commission (FWC)) created the Miscellaneous Award, which may apply to non-managerial employees who do not work in accounting, finance, legal, human resources, public relations or information technology and are not covered by another modern award.
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Determining whether a federal award applies to a job, or which award applies, is not easy. The best source of information for union members is their union. There are also tools and resources available on the Fair Work Ombudsman website.
Awards: The Fair Work Act and modern awards
Chapter: 11.5: Employment contracts, awards and agreements
Contributor: Alexander Lanham, Lawyer, and Samara Jones, Lawyer (Workplace Relationships and Safety), Lander & Rogers
Current as of: 1 September 2024
Law Handbook Page: 955
Next Section: Enterprise agreements
