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Determining employee entitlements – Which Modern Award applies?

The Fair Work Act 2009 (the Act) is one of the most important piece of employment legislation in Australia and sets out the National Employment Standards (NES). The NES make up the minimum entitlements that will apply to any employment relationship. In addition to the Act, the terms and conditions of employment for most Australian employees will be governed by a modern award.

Modern awards are enforceable documents that contain the minimum terms and conditions of employment for those employees covered by the award, as well as any specific provisions that may apply. An applicable award will establish:

- the minimum pay rates and

- entitlements such as leave, overtime and penalty rates

that will apply to persons covered under the award.  An award (and similarly an employment contract or other registered industrial agreement) cannot provide for entitlements or conditions that are less than those provided for under the NES.

As an employer, understanding which award (if any) will cover each of your employees is an essential, but often challenging, first step that is required to ensure legislative compliance. An employee will often be covered by an award that is specific to the particular industry in which they are employed (for example, the Restaurant Industry Award or the Building and Construction General On-Site Award). Where an industry-specific award does not exist there may be an occupation-related award,  such as the Clerks Private Sector Award, that could apply to either all, or some, of your employees.

However, while an industry or occupational based award may appear to apply to your workplace based on the title or industry coverage, it is important that you carefully review the:

- Coverage clauses

- Definitions, and

- Classification Descriptors

contained within the potential awards that could apply in order to determine whether they do actually apply to your employee/s.

It is also important to remember that while only one modern award can cover an individual employee, there may be more than one award that will apply to your workplace. For example, administrative employees may be covered under the Clerks Private Sector Award 2020, while frontline workers may be covered by a different applicable award.

In order to determine which award will cover an individual employee, it is often necessary to examine the major or principal aspect of the work that is being performed by the employee in the workplace. This may include assessing:

-  the amount of time that is spent performing particular tasks,

- what it is that the employee was employed to do i.e. what is the primary purpose of the role?,

- the environment in which the role is performed, i.e. whether the role is based in an office or in a retail environment.

It is essential that an assessment occurs based on the actual duties that are performed by a position, rather than making a determination based on the position title.

In circumstances where you cannot find an industry or occupation that would apply to an employee, consideration needs to be given as to whether the Miscellaneous Award may apply.

Once the applicable modern award has been identified, it is essential that you understand what classification level will apply to the actual role being performed by each employee.  It is this award classification level that will determine the minimum award base rate of pay for that particular employee. To identify the appropriate classification level, the classification descriptors, or classification structure, set out in the award will need to be reviewed.

The classification descriptors within each award will generally outline both the characteristics and the typical skills or duties performed by a person engaged at each classification level. The classification descriptors may also provide examples of indicative roles or position titles that will typically apply to a particular classification level.  Once the applicable classification level has been assigned to a role, the corresponding base rate of pay can then be identified and applied.

If a suitable modern award cannot be identified for either some or all of your workforce and provided that there is not a registered industrial agreement in place, you may find that some employees are deemed to be award free. For award free employees, their entitlements will be governed by the national minimum wage and the NES.

For assistance with ensuring you are meeting your obligations please contact us at [email protected] or 1300 720 004.

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors, such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.

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