Award modernisation is the creation of a system of modern awards to operate within the national workplace relations system from 1 January 2010.
Each modern award has been made by a Full Bench of the Australian Industrial Relations Commission (AIRC) and together with the National Employment Standards (NES) makes up a new safety net for employees covered by the national system.
Modern awards commenced on 1 January 2010, covering most employers and employees in the national workplace relations system.
Modern awards are industry or occupation-based minimum employment standards which apply in addition to the National Employment Standards (NES).
Most federal (pre-reform) awards, NAPSAs and State reference transitional awards were replaced by modern awards on 1 January 2010. Where these arrangements result in a change in minimum pay rates, loading or penalties, these changes may be phased in under most modern awards.
Division 2B State awards continued to operate up to and including 31 December 2010. Employees to whom a Division 2B State award applied are covered by the relevant modern award from 1 January 2011, however the terms of the Division 2B State award continue to apply until the end of the full pay period commencing before 1 February 2011. Changes in minimum pay rates, loading or penalties may be phased in under most modern awards from the first full pay period on or after 1 February 2011.
Modern awards:
- are industry or occupation-based
- cover employers and employees who perform work in the industries or occupations described by a particular modern award
- cover employers and employees in the national workplace relations system
- are legally enforceable.
Modern awards have been created to:
- provide a fair minimum safety net of enforceable terms and conditions of employment for employees which, when combined with the NES:
- is economically sustainable
- promotes flexible modern work practices and the efficient and productive performance of work
- supports a flexible and productive workplace relations system, by promoting collective enterprise bargaining, but not providing for statutory individual employment agreements
- ensures a stable and sustainable modern award system for Australia.
While modern awards started from 1 January 2010, many modern awards contain either or both:
- a model phasing schedule under which wage rates are phased in starting from 1 July 2010 (or from 1 February 2011 for employers who were covered by a Division 2B State award)
- specific transitional provisions which phase in certain conditions.
In most cases, in modern awards that have a model phasing schedule, the wage rates will be phased in over 5 equal instalments from 1 July 2010 (or from 1 February 2011 for employers who were covered by a Division 2B State award) to 1 July 2014. This transition period gives employers and employees who are affected by modern awards enough time to introduce the changes.
As Division 2B State awards continued to operate up to and including 31 December 2010, employees to whom a Division 2B State award applied are covered by the relevant modern award from 1 January 2011. In most cases, the terms of the Division 2B State award continue to apply until the end of the full pay period commencing before 1 February 2011, and phasing arrangements commence from the first full pay period on or after 1 February 2011.
You need to be aware of the minimum terms and conditions in the modern award that applies to your industry or occupation.
There may be new provisions about:
- minimum wages, including piecework rates
- types of employment (e.g. full-time, part-time, casual)
- overtime and penalty rates
- work arrangements (e.g. rosters, variations to working hours, flexible working arrangements)
- annual wage or salary arrangements
- allowances (e.g. travel allowances)
- leave, leave loading and taking leave
- superannuation
- procedures for consultation, representation and dispute settlement
- employing outworkers and the work they perform
- an industry-specific redundancy scheme.
Your modern award will also have a flexibility term which means employers and employees will be able to negotiate changes to meet their individual needs relating to issues specified in the clause of the modern award.
Modern awards operate in conjunction with the National Employment Standards (NES). These standards provide a safety net for all employees in the national workplace relations system, including those not covered by a modern award.
Be sure to check whether any terms and conditions of employment have changed, and if there are any transitional arrangements which may affect these changes.
Most employers and employees previously covered by a federal award or a notional agreement preserving state award (NAPSA) or State reference transitional award are now covered by a modern award.
Note that different rules apply for employees coming into the national system from the NSW, Queensland, South Australian or Tasmanian state systems on 1 January 2010 (e.g. employees employed by sole traders, partnerships, other unincorporated entities and non-trading corporations in those states).
If these employees were covered by a state award immediately before 1 January 2010, they will be covered by a ‘Division 2B State award’ from that time. Division 2B State awards continue until 31 December 2010 when they terminate. From 1 January 2011 employees formerly covered by a Division 2B State award are covered by the relevant modern award, although most modern awards provide for the terms of the Division 2B State award to continue to apply until the end of the full pay period commencing before 1 February 2011.
If a modern award does not exist for a particular industry or occupation, there may be an agreement that applies. Employees not covered by any award or agreement may be covered by a transitional minimum wage instrument.
A modern award will not apply to employees who are paid a guaranteed amount of $108 300 p.a. (during the year ended 30 June 2010 - indexed annually). This means that the terms of the modern award may not apply to many managers and higher income employees - even if there is a relevant modern award for their industry.
Finding your modern award depends on several factors including your job type and duties, and who your employer is. Alternatively, you may be covered by an agreement or a transitional federal minimum wage instrument.
You can find all of the modern awards by visiting the Fair Work Australia website. A list of the modern awards can be found by selecting ‘Awards and award modernisation’, and then ‘Find an award’.
If you are not sure which modern award applies, call the Fair Work Infoline. Before you call, you should make sure you have the answers to several questions about your employer and industry. First check these questions here, then call 13 13 94 and an adviser will help you identify the correct award.
Businesses covered by the national employment relations system but not by a modern award are still required to comply with:
- the relevant transitional minimum wage instrument or national minimum wage order in relation to rates of pay, and
- the National Employment Standards (NES) for minimum terms and conditions of employment other than pay.
There may be an agreement, such as an enterprise agreement, or a transitional collective or certified agreement that applies to your business or a part of your business. All employees will have a common law contract of employment and some employees may have transitional individual agreement (see below).
Terms in modern awards, any agreements or contracts of employment cannot provide for an entitlement less than the NES. Any terms in modern awards, agreements or contracts of employment that attempt to provide for entitlements less than the NES will have no effect and cannot be enforced.
Modern awards may contain terms and conditions about:
- minimum wages, including piecework rates
- types of employment (e.g. full-time, part-time, casual)
- overtime and penalty rates
- work arrangements (e.g. rosters, variations to working hours, flexible working arrangements)
- annual wage or salary arrangements
- allowances (e.g. travel allowances)
- leave, leave loading and taking leave
- superannuation
- procedures for consultation, representation and dispute settlement
- employing outworkers and the work they perform
- an industry-specific redundancy scheme.
Your modern award will also have a flexibility term which means employers and employees will be able to negotiate changes to meet their individual needs relating to issues specified in the clause.
Some modern awards also contain terms about redundancy.
Modern awards may contain a model phasing schedule, specific transitional provisions or no transitional arrangements at all.
Some modern awards contain a model phasing schedule, which means that rates of pay and some other conditions such as casual and part-time loadings, weekend penalty rates and shift allowances will not come into force until the first full pay period on or after 1 July 2010 (1 February 2011 for employers who were covered by a Division 2B State award) and may be phased in over 5 instalments.
In addition to model phasing schedules, there are also specific transitional arrangements that are unique to particular modern awards. These are needed in some industries and occupations to reduce the impact of the transition between previous wages and conditions and those in the relevant modern award.