Given there are more than 120 modern awards, the first step when hiring an employee or reviewing their terms of employment should be to confirm which award applies.

The risks of applying the incorrect modern award to a business or its employees may include costly underpayment claims or statutory penalties for breaching award terms and conditions, not to mention the potential reputational and cultural damage to your business.

Modern Awards and coverage

A modern award applies to national system employees in a certain industries or occupations. The modern awards commenced on 1 January 2010 and operate in line with the National Employment Standards (NES) to provide a minimum safety net of terms and conditions for Australian employees. Modern awards are based on industry and/or occupation.

An industry award is one that applies only if the business operates in the award-defined industry. This means the primary purpose of the business must align with the coverage definition contained in the award. An example of an industry award is the Alpine Resorts Award 2020.

An occupational award applies to individual roles an employee may perform for the business, irrespective of the primary purpose of the business. An example of an occupational award is the Nurses Award 2020.

A modern award can be both industry and occupational, which means it can apply both to a business in the defined industry and/or to an individual employee performing a role within the scope of the award. An example of an award that has both industry and occupational coverage is the Health Professionals and Support Services Award 2020.

It is not unusual for a workforce to be covered by different awards depending on the work performed, meaning many businesses need to understand and apply more than one modern award. This can present unique and complex challenges for compliance with a range of award terms and conditions.

Why does modern award coverage matter?

Modern awards can be confusing, hard to navigate and often open to differing interpretation. It is critical to make sure you are applying the correct award as they contain important legal requirements for businesses, including fundamental terms and conditions of employment such as:

• minimum wage rates
• overtime and allowances
• consultation about major workplace change
• dispute resolution.

Award coverage is an objective test and cannot be overridden, even if an employee and employer agree to apply different terms and conditions. The relevant award will remain the minimum safety net unless an enterprise agreement applies instead. It is your responsibility to ensure you are meeting at least the necessary minimum terms and conditions.

Failure to pay an employee at or above the minimum wages under the relevant modern award places the business at a risk of an underpayments claim. Employers must also take all reasonable steps to follow procedural clauses such as consultation requirements or the proper process for resolving disputes.

Not sure where to start? Or just want to check you’re on the right track? Our Workplace Relations Advice Line can provide guidance on which modern award applies to your business, and how to take steps to meet the appropriate employment obligations.

How the Chamber can help

The Victorian Chamber’s experienced consultants can support businesses in providing advice on award coverage, position descriptions review, wage audits and recordkeeping obligations.

For more information or to access our consulting services call us today on (03) 8662 5222.

The Workplace Relations Advice Line offers general advice on a range of workplace issues, including:

• award interpretation, classification and minimum entitlements
• disciplinary processes, performance management and termination
• personal illness and injury
• parental leave and flexible working arrangements
• redundancy
• occupational health and safety and WorkCover.

For assistance on any aspect of your employment obligations, please call the Victorian Chamber Workplace Relations Advice Line on 8662 5222.