January 3, 2019

How to use Awards for your Australian business

How to use Awards for your Australian business

So what is an Australian Award and how can you use one for your Australian business?

Let's start with the Award definition below.

Award definition

An Award states the minimum terms and conditions for employees in an industry. There are currently 122 Awards in Australia.

And it’s good to know about any Awards that may apply to your business because you can:

(a) pay your workers correctly; and

(b) avoid legal trouble that may arise because of underpayment.

Now, if you have an enterprise agreement for your business, that will apply, and not an Award.

So what sort of Awards exist? Below are some sample Awards.

Sample Awards

  • General Retail Industry Award
  • Social, Community, Home Care and Disability Services Industry Award
  • Clerks - Private Sector Award

Now, how will you know which Award will apply?

Which Award applies? 

The coverage clause of the Award explains which employees are covered by the Award. Tip - you will usually find that most awards follow a similar format, so you are likely to find ‘coverage’ under clause 4 of most Awards. 

Below is a sample extract from coverage clause in the General Retail Industry Award:

4.1 This industry award covers employers throughout Australia in the general retail industry and their employees in the classifications listed in clause 16—Classifications to the exclusion of any other modern award. The award does not cover employers covered by the following awards:

  • the Fast Food Industry Award 2010;

  • the Meat Industry Award 2010;

  • the Hair and Beauty Industry Award 2010; or

  • the Pharmacy Industry Award 2010.

Which Award applies for an employee with multiple jobs?

When identifying which Award will apply, the Fair Work Commission is interested in the nature of the employee’s work and the principle purpose the employee was hired for.

Importantly, the Commission won’t simply look at the amount of time an employee spends completing certain duties.

Are you paying above Award?

If you are paying above Award, that’s great because you have a buffer when pay rates increase under the Award yearly.

Each year from July 1 pay rates in Awards change and are published on the Fair Work website.

Bonus tip: you may wish to add this clause if you are paying above Award amounts to an employee:

"If your rate of pay is more than the base rate of pay set out in  the Award, your pay is in satisfaction of all minimum entitlements including minimum wage, overtime, allowances, penalties and extra rates for working evenings, weekends or public holidays and payment for temporarily working in a more senior role."

Awards minimums

Now it's important to note, the Award sets the minimum terms and conditions. You may have more beneficial ones in an employment contract but you cannot pay less than the Award or legislation.

The Fair Work Act 2009 (Cth) (the Act) is legislation that sets out minimum entitlements. 

For example, the Act sets out 4 weeks annual leave per year. You can give your employees 5 weeks annual leave (more than the 4 week minimum) but you cannot give your employees less.

About the author 

Vivian Michael

As founder and lawyer at Michael Law Group, Vivian advises Australia's top entrepreneurs on business and employment matters. Clients benefit from Vivian's commercially focussed and pragmatic legal advice, business experience, and commitment to deliver the best quality business legal services to her clients.

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