HR for Business Owners Part 1 of 12 – Modern Awards
So often business owners find themselves in a position of employing several staff and subsequently being responsible for:
– Ensuring pay compliance with over 120 modern awards, the 11 National Employment Standards and superannuation requirements
– Managing employee performance
– Managing workplace injuries and illness
– Dealing with employee grievances
– Creating a positive workplace culture that encourages innovation, empowers the team and drives employee engagement
– Setting department and individual objectives aligned with the organisations overall objectives
The intent of this 12-part series is to provide insight and education to business leaders or individuals responsible for the above functions.
How do I know if a modern award applies at my workplace?
A list of modern awards is available here https://www.fairwork.gov.au/employment-conditions/awards/list-of-awards#a-z
There are currently 121 modern awards.
Every modern award contains a coverage clause outlining who it applies to (normally clause 4).
It is possible to have more than one modern award applying at your workplace. In fact, many employers may have 3 or more modern awards).
The first step is to go through the list of modern awards looking at the titles and narrow it down to any that ‘may apply’ – if you’re unsure, include it. In this step you will just be ruling out the ones you know definitely won’t apply.
Once you have narrowed it down, you then need to go and read the coverage clause. Review the coverage clause and rule out any that don’t apply.
The last step is to look at the classifications in the award (normally in a schedule attached to the award) and match the positions in your business to the appropriate classification.
Once you have done this, you can then review the minimum hourly rate, overtime, penalties, allowances and other monetary provisions as well as requirements of the award i.e. when employees need to be given a break.
I pay a salary to each of my employees, do I need to worry about modern awards?
Yes, you do. Even if you pay a salary, you need to ensure that the salary is equal to or greater than what the employee would be paid if they were paid as per the award. Awards contain a number of provisions that include the minimum hourly rate, payment for overtime (and parameters specifying when overtime applies), payment for weekend work, public holidays and specific allowances that may apply to the work being performed, among many other things.
We have seen so many headlines in recent times of organisations (even large ones with internal HR, payroll and compliance departments) who have signed an undertaking with the FWO to backpay employees a significant amount in wages. This could devastate a business. Like any other part of your business, take the time to get it right. Compliance is not something you can opt out of.
What do modern awards cover?
This varies, depending on the award, however generally speaking, modern awards cover:
1. Coverage – specifies who the award applies to.
2. Individual Flexibility Arrangements – specifies the provisions of the award that an employer and employee can agree to vary. There are specific requirements that must be met.
3. Definition of a full time, part time and casual employee.
4. Apprentice overview.
5. Definition and entitlements for junior employees.
6. Hours of work – defines the ordinary hours of work and specifies when penalties apply.
7. Rostering – requirements and options for amending.
8. Breaks – when they need to occur based on hours of work.
9. Minimum wages – the minimum hourly rate that can be paid.
10. Payment of wages. Specifies when and how wages can be paid
11. Allowances – specifies industry or occupation specific allowances that may apply.
12. Superannuation – may specify additional requirements beyond superannuation legislation.
13. Overtime and penalty rates – outlines when they apply and the rates
14. Leave and public holiday entitlements
15. Consultation requirements
16. Workplace delegates rights
17. The right to disconnect
18. Dispute resolution
19. Termination and redundancy entitlements
20. Classification definitions
What’s the difference between an industry and occupation award?
An industry award is an award that applies to a particular industry e.g. General Retail Award applies to the retail industry. An occupation award applies to a specific occupation but can apply across multiple industries e.g. Clerks Private Sector Award applies to employees performing clerical work (as described in the classifications) across various industries. The important learning is that an industry award applies before an occupation award. For example if there’s an industry award that contains clerical classifications, they will be applicable, instead of the Clerks Private Sector Award.
When do wage increases occur in modern awards?
The Fair Work Commission (FWC) reviews the minimum wages annually, with any increase handed down on the first full pay period after 1 July each year.
Do modern awards get updated?
Yes, the FWC has the right to review modern awards in specific circumstances. It is important that you register for any award amendments. You can do so here https://www.fwc.gov.au/subscriptions
Need help?
Reach out to our team at the HR Impact to support you in identifying modern award coverage and ensure you aren’t underpaying your employees.
