What Are Awards?
Awards (often described as a ‘Modern Awards’, following an overhaul of the industrial relations system in 2009) are written sets of minimum standards that apply to a particular category of employees or to a particular industry. Awards tend to set basic entitlements relating to:
- Minimum wages;
- Hours of work;
- Leave entitlements;
- Penalty and casual rates;
- Overtime; and
- Other minimum conditions.
The Awards system together with the National Employment Standards (‘NES’) work to provide a “safety net” for employees who may not be in a position to bargain for better pay rates and conditions.
Who Is Covered?
Not everyone is covered by an Award. “Blue collar’ or non-professional employees are usually covered by Awards. With some important exceptions, many professionals are not covered by Awards. Lawyers and accountants are not typically covered by awards (for example). Employees who are primarily concerned with management are often not covered by awards.
Some of the awards with significant coverage are:
- The Clerks – private sector Award, which will apply to most people employed in an administrative or clerical role;
- The Building and Construction General On-Site Award, which will apply to most people working on construction sites;
- The Nurses Award, which applies (unsurprisingly) to nurses;
- The Health Professionals and Support Services Award, which applies to many employees in the health and medical space who are not (generally) nurses or doctors;
A full list of awards can be found on the Fair Work Commission Find An Award page. If you have any doubt as to whether or not you (or an employee of yours) falls under award coverage, we can advise you in relation to this.
Who Is Not Covered?
As noted above, certain professional and managerial roles do not typically fall under Award coverage.
Further, Awards will not apply where:
- A ‘high income’ employee has been given a guarantee of annual earnings and, essentially ‘opted out’ of the benefits conveyed by an applicable Award; or where
- A registered enterprise agreement covers the business. It is important to note that if the base rate of pay in an agreement is lower than those in the relevant award, the base rate of pay in the modern award will apply. An employee under an enterprise agreement must be “better off overall” not worse off in comparison to the relevant modern award.
Some employers and employees will not be covered by a modern award or an enterprise agreement. In these situations, they are considered ‘award and agreement free’. This means that the National Minimum Wage and the NES will form the minimum terms and conditions of employment.
Why it’s important for employers to get advice on award compliance
Awards are arduous documents to read (the Clerks – Private Sector Award is 101 pages long at the time of writing this summary). They often contain dozens of provisions that can alter or effect an employee’s pay entitlements, and accordingly, unless an employer has a good understanding of those provisions, it is possible for an unpaid debt to accrue to an employee over time without either party being aware of it. If this happens, and the employee realises they have been underpaid, an employer might find themselves the subject of an underpayment claim.
These can be significant, particularly when there has been a failure to pay overtime entitlements (which can be substantial). A common problem that we see is where an employer has been paying an ‘above award’ rate, in the belief that it is compensating the employee adequately for award entitlements. However, the ‘above award’ rate, while higher than the minimum hourly rate, is often not sufficient compensation for substantial amounts of overtime, which can entitle an employee to double time and greater in certain common circumstances (eg: if they work early or late, if they aren’t given a sufficient break between shifts, if they work beyond the normal number of hours in a week, if they work on weekends). This can be a rude shock for an employer.
Further, a failure to comply with Award obligations can result in penalties being issued against the employer, and even against the individual who controls the employer (there is no benefit of a corporate veil to be relied upon when it comes to award compliance). Penalties typically exceed any actual underpayment.
How We Can Help
We can help employers ensure they are complying with their obligations under Awards. This can include an advice on the Award or Awards that might be applicable in a particular workplace, as well as an audit of agreements and Award entitlements to ensure minimum standards are being met. We can also help to deal with any claims that might be brough by employees for underpayments.
If you are an employee and you think you have been underpaid, we can help you to bring that claim as well.