Australia has National Employment Standards (NES) that apply to employees, which outline the minimum standards and entitlements for employees across Australia. The Fair Work Act 2009 (Cth) legislated the NES, which operates Australia-wide. Further to the NES guidelines, a number of modern awards apply to industries and occupations across Australia. These awards provide more specific minimum entitlements for employees covered by the awards, including minimum pay rates. This article will guide you on what awards are and what award wages are in Australia.
What is an Award?
An award is a legal document outlining certain conditions of employment, including minimum wages. There are more than 120 awards spanning Australia’s industries and occupations, with certain sectors having multiple relevant awards.
Where an award or an enterprise agreement does not cover an employee, they are award-free and agreement-free. In most cases, minimum entitlements under the Fair Work Act cover those employees.
Who Does an Award Cover?
Awards cover most employees Australia-wide. However, there are many exceptions to this rule. For example, suppose your employee is a manager or high-earning individual, belongs to a certain profession, or is covered by an enterprise agreement. In that case, an award might not cover them. Fair Work Australia maintains a list of all awards.
It can be difficult to determine which awards apply to your employees, and it is possible for an employer to be covered by more than one award. For example, if you operate a carpentry business, the Building and Construction General On-site Award may cover your carpenters. However, your clerical staff will unlikely be covered by this award and may instead be covered by the Clerks – Private Sector Award. As an employer, it is up to you to know which awards apply and what standards these awards provide.
Continue reading this article below the formWhat Do Awards Cover?
Modern awards cover the minimum entitlements that employees receive. For example, awards cover:
- pay rates;
- hours of work;
- penalty rates and conditions;
- break times;
- leave, including carer’s, annual and long service leave;
- special leave arrangements; and
- termination notice and redundancy pay.
Ultimately, the national minimum wage and the NES applies to all employees. This application is irrespective of whether an award covers an employee.
What are Award Wages?
Award wages refer to the minimum pay entitlements that those covered by a certain award are entitled to.
Additionally, the Fair Work Ombudsman has pay guides for each award, which outline:
- full-time, part-time and casual rates of pay;
- monetary allowances; and
- penalty rates.
The monetary benefits outlined in the pay guides will differ depending on the award.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Failure to Pay Award Wages
Awards are not merely guidelines; they are legal requirements. Therefore, breaching an award can result in severe consequences for your business. These consequences can be to your finances and reputation. For example, wage theft includes deliberately underpaying your staff or withholding their wages, which is an offence. In some states, such as Victoria, wage theft is a criminal act.
However, underpayments might happen because of a mistake or a payroll error. Wage theft does not include mistakes that occur where you have taken due care and diligence. Nonetheless, if you think you have underpaid an employee, you should work out how much the employee has been underpaid and ensure to rectify the error. The Fair Work Ombudsman often deals with non-compliance.
It is important to remember that underpayments may result in penalties for your business. Civil penalties can cost up to $63,000 for corporations per contravention of the Act.
How Often Do Award Wages Change?
The Fair Work Commission annually reviews the wages of all employees covered by the national workplace relations system. Following this review there may be an increase to the national minimum wage. Award wages are subsequently updated by the Fair Work Commission if necessary to meet the national minimum wage requirement.
Any amendments to Award wages will usually come into effect on 1 July each year; however, some awards may be amended more frequently. If an Award covers your employees, you should keep up to date with any changes to the relevant wage rates to ensure that you continue to pay your employees correctly.
How Do Awards Interact With Employment Agreements?
The relationship between Modern Awards and Employment Agreements is crucial in establishing the baseline for employment relationships. Modern Awards set the minimum standards that must be met, irrespective of individual negotiations. Employment Agreements, however, allow for customisation to accommodate specific circumstances, provided the agreed-upon terms are equal to or better than the Modern Award’s minimum requirements.
In practical terms, when forming an Employment Agreement, employers must ensure compliance with the applicable Modern Award. This involves aligning the terms of the agreement with the minimum wages outlined in the relevant award. Failure to do so may result in legal consequences, including penalties and disputes.
Additionally, changes to Modern Awards, such as updates to minimum wages or working conditions, may impact existing Employment Agreements. Employers need to stay informed about any amendments to Modern Awards and update their Employment Agreements accordingly to remain compliant.
Ultimately, the interaction between Modern Awards and Employment Agreements establishes a balance between industry-wide standards and individualised employment arrangements, providing a framework that protects both employers and employees in the ever-evolving landscape of labour relations.
Key Takeaways
Many awards apply to industries across Australia. Furthermore, these awards provide for more specific minimum entitlements for employees, including:
- pay rates;
- hours of work;
- penalty rates and conditions;
- break times; and
- leave.
If none of the awards applies, you must abide by the National Employment Standards. If you need assistance understanding award wages, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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