First published on Monday, August 12, 2024
Last updated on Monday, August 12, 2024
The modern awards system came into effect on 1 January 2010. There are currently 121 modern awards of general application in Australia—they cover most working people in Australia.
But what is a modern award? What is an award classification? And how do they fit into Australia’s overall employment relations landscape?
We’re answering those questions today. Let’s dive right in.
What are modern awards?
A modern award is a document that sets out minimum terms and conditions of employment for its specific industry or occupation.
Both modern awards and enterprise agreements and the National Employment Standards (NES) are included in the Fair Work Act.
This means that modern awards must also adhere to the NES and be updated alongside them when needed.
The entitlements provided for in a modern award include:
- Pay
- Hours of work
- Rosters
- Breaks
- Allowances
- Penalty rates
- Overtime rates
As an employer, you are legally obligated to adhere to the provisions of a modern award when it applies to your employees.
The most common awards in Australia
To illustrate just how wide-ranging the modern awards system is. Here are some examples of current modern awards:
- Aged Care Award 2010
- Building and Construction General On-site Award 2020
- Hair and Beauty Industry Award 2010
- Vehicle Repair, Services and Retail Award 2020
- Clerks – Private Sector Award 2020
- Real Estate Industry Award 2020
- Miscellaneous Award 2020
- Hospitality Industry (General) Award 2020
Because of how specific each modern award is, it’s important to recognise that it’s possible that every employee in your company won’t fall under the same award.
For example, your administrative staff may not be covered by the same modern award as retail employees even if they work for the same retail company. So, they would have different minimum entitlements that you must pay attention to in order to stay compliant.
What are award classifications?
Now that we’ve covered what a modern award is and what it includes, let’s get into award classifications.
Once you’ve determined an employee’s occupation and which modern award they fall under, you then need to account for the duties they perform in their role and their experience and qualifications.
An employee’s job experience and any relevant qualifications they hold can have an impact on their classification level and the minimum rate of pay they’re entitled to according to their award.
For example, if you hire an employee who is straight out of university, the minimum award pay rate they’re entitled to may be lower than the award pay rate for an employee with the same award who has over five years of experience. But as time goes on, and the same employee gathers more experience or even further qualifications, you will need to review their classification level to make sure you’re always paying them the appropriate pay rate they’re entitled to under their award.
How do you determine an employee’s classification?
According to Fair Work Australia, there are five key steps to pinning down an employee’s classification.
1. Find classification definitions
These definitions are included in the modern awards.
2. Check how to classify employees according to the instructions included in the award
Many awards do contain instructions, but those instructions need to be balanced alongside the following steps.
3. Consider the definitions
In order to get the classification right, make sure you read through the definitions and consider every factor that can affect your employee’s classification.
Including their:
- Tasks, duties, job title
- Skills and competencies
- Qualifications and training
- Experience in the role
- Ability to supervise others or the supervision they require in their role
4. Compare classifications
Before cementing your decision make sure you take a look at the classifications above and below the one you’ve chosen to ensure you make the best choice.
5. Share the classification
Once you’re certain about an employee’s classification, the final step is to keep your employees informed.
This will help an employee understand what’s expected of them and even guide them on the steps they can take to progress in their career.
What happens when a modern award doesn’t apply?
Not all employees are covered by an award. Either because the industry they contribute to isn’t covered by the modern award system, or because they’re covered by a registered agreement or enterprise agreement.
If your employee is award and agreement-free, they’ll be covered by the NES and National Minimum Wage system.
Get support navigating the award and classifications system
Even if you have a thorough understanding of modern awards and know, in theory, how to determine an employee’s classification—putting this knowledge into practice can be a challenge.
That’s why BrightHR’s end-to-end people management software and services include BrightAdvice. This 24/7 adviceline connects you to a team of employment relations advisers who can offer you jargon-free, immediate advice on your specific workplace challenge.
Learn all the ways BrightHR can help you transform your business by booking your in-depth guide to our suite of features, here.
