Many businesses have a registered agreement that covers their employees. Modern awards do not apply to an employer and employee while they have one of these agreements registered with an appropriate authority in place.
The only exception to this is if a modern award applies along with one of the following kinds of agreement-based transitional instruments:
- a pre-reform certified agreement
- an old IR agreement and
- a section 170MX award.
In these cases the relevant agreement based transitional instrument prevails over the modern award to the extent of any inconsistency. The base rate of pay in the agreement based transitional instrument must not be less than the relevant modern award. This situation also applies to Division 2B state employment agreements made within States that referred their industrial powers to the Commonwealth from 1 January 2010.
The base rate of pay under an agreement must not be less than the base rate of pay under the relevant modern award. If there is no modern award that covers the employees the agreement rate must be at least equal to the national minimum wage. Terms in a modern award about outworker conditions will also apply to parties covered by an agreement.
Agreements also operate alongside the NES on a ‘no detriment’ basis. This means that, employees must receive at least the minimum conditions in the NES (to the extent that they apply), along with the entitlements in their agreement (provided that they are at least as beneficial as the corresponding NES entitlement(s)).
If the agreement is terminated then the employee’s minimum entitlements will come from the modern award that covers the work that they perform. If there is no modern award, then the employee will be covered by their relevant pre-modern award or the national minimum wage.