Understanding the ins and outs of modern awards is essential for employers in Australia. These legal documents set the minimum pay rates, work hours, leave entitlements, and other conditions of employment, ensuring fairness in the workplace. If your employees aren’t covered by a registered or enterprise agreement, they are likely covered by a modern award.
In this article, we’ll walk you through why understanding modern awards is important, how we can help you determine which ones apply, and what can happen if you get it wrong. If you’re inexperienced, this will provide you with essential knowledge, but even if you’re an expert, we recommend getting to know your award better.
It’s easy to assume you have it all figured out, but knowing the ins and outs of your award can help prevent costly mistakes down the line. Getting it wrong can lead to serious consequences. Employees could make claims for back pay, which is a headache no one wants. You might also face penalties from the Fair Work Ombudsman and damage employee morale in the process. The good news is that we are here to help you get it right.
Award Coverage
Australia has over 100 industry and occupation awards covering most workers unless a registered workplace agreement applies. Determining the right award for your business can be challenging, especially if you’re unsure where to start. If you’re uncertain which award applies, we can research it together. At ER Strategies, we simplify the process and take the guesswork out of finding the correct award for you.
Remember, it’s not as simple as picking the award you want to use—your award is determined by the work being performed or the industry you are in, not by your preference, and very few employees are award free. For instance, if you’re running a retail store, you can’t just apply a hospitality award because it seems to have more flexible conditions. If your employees’ work falls under the General Retail Industry Award, that’s the one you need to follow. As the saying goes, if it looks like a duck and quacks like a duck, it’s a duck. You don’t choose the award; your award chooses you.
To help us find the right award for a particular position, we’ll need a bit of information from you. Tell us about the job title, main duties and responsibilities, any required qualifications, and the industry your business operates in. The more detail you can provide, the easier it is for us to pinpoint the correct award. If there are any specific conditions or nuances about the role, be sure to mention those too. This way, we can ensure we find the most accurate match for your needs.
We’ll handle the research for you, looking at the award coverage clauses and award classifications (we’ll talk about that later in this article) to ensure we pinpoint the correct award. If your workplace operates under a registered agreement, that will take precedence over the award, and we’ll make sure that’s considered too. No need to wade through Fair Work’s website—we’ve got you covered!
Multiple Awards in the Same Business
It’s also important to remember that it’s common to have multiple awards applying to different roles within the same company. For example, let’s say you run a construction business, and you employ both tradespeople and office staff. Your builders might all be covered by the Building and Construction Award, while your admin and support staff fall under the Clerks—Private Sector Award. Although it’s the same business, different roles may fall under different awards, depending on the duties performed. This means you’ll need to be diligent in making sure each employee is classified under the correct award to ensure compliance and avoid potential issues.
Award Classifications
Understanding your employees’ classification under the award is just as important as knowing which award applies. Misclassifying employees can result in serious issues, including underpayment, non-compliance, and potential penalties. So, always make sure to check classifications regularly and carefully and keep them up to date.
A common misunderstanding when classifying employees is thinking that the pay rate determines the classification level. The reality is, it’s the duties and qualifications of the role that set the level. The pay rate matches up with the classification, but you can choose to pay someone more without changing their classification. So, if you’ve got an employee with exceptional skills or experience, you can offer a higher salary without affecting their official classification.
As an example, imagine you’ve got an employee named James who works as a receptionist at your small law firm. James may have a straightforward job title, but he’s got some impressive extra skills—he’s fluent in multiple languages and can handle your firm’s most demanding clients with ease. Wanting to reward James for his hard work and dedication, you decide to offer him a higher salary than the usual rate for his “Receptionist” classification. While you’re paying him more because of the added value he brings, his classification remains the same. Why? Because even though James has proven himself to be a superstar, his core role is still that of a receptionist. The classification is based on the tasks he performs – not how much he’s earning. So, even though you’re paying him more, his classification remains the same.
Takeaways
Understanding modern awards isn’t just about ticking boxes. It’s about ensuring your employees receive fair pay and conditions while protecting your business from the potential risks of non-compliance. Don’t wait for something to go wrong—make sure you’ve got the right award, check your classifications, and stay on top of any changes. And remember—if it looks like a duck and quacks like a duck, it’s probably a duck. Make sure your award and classification fit the roles your employees are performing.
Do You Need Help?
The following is a list of public holidays falling in each state in April – May 2025. All states and territories will have Easter public holidays (though some are called different names), and each state also has other days across the next couple of months. Has it been a while since you properly reviewed all your employees? Are you losing sleep over potential compliance issues? Has your business changed or expanded and you’re not sure that everyone is still being classified and paid correctly?
We can also do a full pay audit for you. This is an extra service we provide which can be a deep dive into all your employees, or an analysis of a select group you may have concerns about. We can analyse your award, classifications and whether your rates and allowances are correct. For further information and a detailed quote, please contact us.
Need Advice?
ER Strategies are experts in employment compliance and can assist you in managing your employment compliance responsibilities. To discuss your obligations and assistance we can provide, get in touch with us at 1300 55 66 37, or click the button below.
