How Do You Know Which Modern Award Applies?
Working out which Modern Award applies to an employee sounds like it should be pretty straightforward. Find their job title, find an Award that sounds close enough and move on. Unfortunately, Awards are rarely that tidy.
The right Award can depend on your industry, the work the employee actually performs and whether the Award includes a classification that fits their role. Getting it wrong can affect much more than the employee’s base rate. It can also impact overtime, penalty rates, allowances, breaks, minimum engagement periods and other employment conditions. That’s why it’s worth checking properly before you assume you’ve got the right one.
Start With the Industry Your Business Operates In
**Note: Before you start, check whether an enterprise agreement applies to the employee. If it does, their pay and conditions will generally come from that agreement rather than directly from a Modern Award. The relevant Award can still matter, including when checking minimum base pay rates.
A good starting point is your industry. Many Modern Awards are industry-based, covering a whole industry such as retail, hospitality, construction, cleaning and manufacturing.
But finding an Award with your industry in the title doesn’t necessarily mean every employee in your business is covered by it. You still need to check who the Award actually covers and whether the employee’s role fits within one of its classifications. One business can also have employees covered by different Awards, depending on the work they perform. A manufacturer, for example, may have production staff covered by the Manufacturing Award and administrative staff covered by the Clerks Award, depending on their duties and the coverage provisions of each Award.
The Fair Work Ombudsman’s “Find my award” tool is a useful place to start, but it works best as a first step rather than the final answer. From there, check the Award’s coverage clause, usually clause 4, including any exclusions, and its classifications to confirm it covers both your business and the employee’s role.
Does an Employee’s Job Title Determine Their Modern Award?
Not on its own.
One of the easiest traps to fall into is relying too heavily on the title written on an employment contract. A “Coordinator”, “Manager” or “Administrator” in one business may be doing very different work to someone with the same title somewhere else. What matters more is what the employee actually does.
Some useful questions to ask are:
What work do they perform day to day?
What level of responsibility do they have?
Do they supervise anyone?
What qualifications or experience are required?
Does the relevant Award include a classification that reflects the role?
The title might point you in the right direction, but it should not be the only thing you rely on.
Industry Awards vs Occupational Awards
Most Modern Awards are based on an industry, while others apply to particular occupations. Generally, you would first look at whether an industry Award covers your business and the employee’s role. If it doesn’t, an occupational Award may need to be considered.
This is where employers can easily go wrong. An employee doing office-based work is not automatically covered by the Clerks Award simply because they work at a desk. A receptionist at a hotel, for instance, is likely to fall under the Hospitality Award rather than the Clerks Award, because the hospitality industry Award covers front office roles. Looking at Award coverage as a whole, rather than matching an employee to the first Award that sounds right, helps avoid this.
How to Find the Correct Award Classification
Once you have identified the Award, you still need to work out the employee’s classification.
This can be just as important as choosing the Award itself.
Classifications usually take into account the employee’s duties and responsibilities, their skills, experience and qualifications, how much supervision they receive, and whether they make decisions or supervise others. And classifications can change.
An employee who starts in one role and gradually takes on more responsibility may no longer fit the classification they originally started under. We often see this with retail or hospitality staff who start on the floor and, over time, take on rostering, opening and closing, or supervising junior staff without anyone revisiting their level.
If the classification changes, the minimum rate may change too, which makes this an area to review regularly rather than set once and forget. It is also worth checking whether the Award requires progression through pay points within a classification. Depending on the Award, this may be based on length of service, experience or demonstrated competency, so an employee’s minimum rate may increase even when their duties stay the same.
Does a Salary Mean an Employee Is Award-Free?
No, and this is another common assumption. Paying someone a salary, paying them above the Award rate or giving them a senior-sounding title does not automatically mean the Modern Award stops applying. Some employees are genuinely Award-free, particularly in certain management or professional roles, but you need to assess that properly.
If an employee is covered by an Award, other Award conditions may still apply even if they are paid well above the minimum rate. That can include overtime, penalty rates, allowances, hours of work and rostering requirements. A salary can cover certain monetary entitlements if the arrangement is set up correctly, but it needs to clearly identify which entitlements are included.
If you are using an annualised wage arrangement under an Award, check that the Award allows it for the employee’s classification and follow its specific requirements. These may include written details of the arrangement, limits on the hours covered, time records and regular reconciliations. Other salary arrangements also need to be checked carefully to ensure the employee receives at least their Award entitlements for the work performed.
What Happens If You’ve Been Using the Wrong Award?
The good news is that using the wrong Award does not automatically mean an employee has been underpaid.
But it does mean you should check.
You may need to review:
the employee’s classification
minimum pay rates
overtime
penalty rates
allowances
hours of work
breaks
other Award entitlements.
If the review identifies an underpayment, it needs to be corrected. You should also address any other Award conditions that have not been applied correctly. And the longer the wrong Award or classification has been used, the bigger that issue can potentially become. It is much easier to deal with this early than to discover it later after an employee raises a concern.
Need Help Working Out Which Modern Award Applies?
Award coverage is one of the most common questions we’re asked, and it’s rarely as simple as it looks. It can become complicated when employees perform mixed duties, several Awards appear relevant or a role does not neatly fit a classification.
HR Dynamics can help you review your employees’ roles, Award coverage and classifications so you can be more confident you are applying the right conditions. If you are unsure which Modern Award applies, or you are worried you may have been using the wrong Award or classification, get in touch with our HR team and we can help you work through it.
