Modern awards (also known as industry awards) are a vital type of legal document that must be understood concerning having your employees. This is essentially a legal document that sets out minimum employment conditions in addition to the National Employment Standards (NES). As an employer, you must have a comprehensive understanding of which award covers your employees and what your obligations are as an employer.
What does the modern award cover?
The most fundamental entitlements of for an employee such as:
- Rate of pay
- Hours of work
- Any penalty and overtime rates
- End of employment
Who is covered by the modern award?
Awards apply to employers and employees specific to the industry they work in and the type of job that they work.
How do I find out which award applies?
Penalties and issues for breach of modern awards
Any violation of award conditions can attract significant penalties for an employer as well as the individuals involved. This often occurs with multiple violations over an extended period that usually results in compounding risk. Failure to comply with employer obligations under modern awards are punishable by a maximum penalty of up to $12,600 for an individual and $63,000 for a body corporate for each breach of the Fair Work Act 2009.
A common misconception amongst employers is usually attributed to a lack of understanding of the compliance requirements of the modern award. Often, employers believe that paying over-award rates will ensure modern award compliance. However, as modern awards dictate far more than just the rate of pay, that all entitlements and conditions are met. Some of these include specific rostering and overtime conditions that must be considered.
Another aspect is a lack of understanding of modern awards concerning high-income professionals. There is an assumption that recent awards do not cover them, which can be a severe oversight.
All such penalties and breaches are not only limited to penalties associated with companies but also with the individuals involved. Under Section 550 of the Fair Work Act, mid-level managers such as HR managers, payroll officers and department managers can be personally penalised for accessorial liability. Therefore, businesses must be mainly focused on educating their management staff in ensuring they are complying with modern awards.
Additionally, the risk of being exposed in the media contributes to risks associated with a business operator’s reputation above the financial penalties related to this breach. A well-known recent example of this was Masterchef Judge George Calombaris, who faced penalties for underpaying workers $2.6 million. For such a public figure, this was a significant dent on public perception of his personal brand as well as his restaurant businesses. Similarly, the well-known pharmacy operator, Chemist Warehouse, had recently been forced to back-pay almost 6000 workers more than $3.5 million. Workforce Guardian’s article provides some of the most recent and most well-known examples of breaches with working conditions in Australia.
Modern awards can be complicated and confusing due to a multitude of minimum conditions that must be met by the employer. Failing to meet one of these entitlements can result in a breach of the modern award despite meeting all other conditions. Therefore, it’s important a comprehensive understanding of the requirements of both the National Employment Standards (NES) and the relevant industry award is met.
To better understand your employer obligations in more details, click here for an in-depth guide on employer obligations.
If there is any doubt about which modern award applies to your business and what your obligations are, it is heavily recommended that you seek advice from a qualified accountant. At Box Advisory Services, our Chartered Accountants are well versed in interpreting these modern awards and formulating the appropriate recommendation for you and your business to minimise risk. Book an appointment with us now!
Please note that every effort has been made to ensure that information provided in this guide is accurate. You should note however, that the information is intended as a guide only, providing an overview of general information available to contractors and small businesses. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek your own advice for any legal or tax issues raised in your business affairs.