Am I Still Covered by an Award if I Sign an Employment Contract?

Quick answer: Yes — your award still applies (unless you’re award‑free)

Signing an employment contract does not remove your coverage under a Modern Award if your role falls within an award classification. 

Modern awards set the minimum pay and working conditions that apply to particular industries and occupations. Even with a signed contract, those award conditions continue to apply unless you are genuinely award‑free. 

While a written contract can improve your conditions — such as offering higher pay or extra leave — it cannot legally provide less than what the award requires.

Let’s take a closer look at the legalities and how they work in practice. 

Defining and understanding modern awards 

Modern awards are legal documents made by the Fair Work Commission. They outline the minimum terms and conditions for employees in specific industries or occupations. 

Each award contains details on:

• Minimum pay rates and classifications
• Penalty rates for weekends, public holidays, and overtime
• Allowances (like travel, uniform or meal allowances)
• Break and rostering rules
• Overtime and shift work arrangements

Awards apply on top of the National Employment Standards (NES). For example, a hospitality worker might be covered by the Hospitality Industry (General) Award 2020, which sets out penalties for late‑night shifts and the minimum hourly rate for their classification level.

If no Modern Award correctly covers your role, you may be award‑free. Award‑free employees still receive protection under the NES and must be paid at least the national minimum wage. To check whether a role is award‑free, visit the Fair Work Ombudsman’s page on award‑free employees.

Award vs employment contract: how it works 

Employment contracts are agreements between employers and employees that outline the terms of employment, including duties, compensation, and benefits. However, even if you sign a contract, an applicable award continues to set the legal minimum standards that your employer can’t reduce or remove.

Contracts can offer more, not less

An employment contract can always improve on award terms. For instance, if the award sets a minimum hourly rate of $25.00, an employer can offer $28.00 in the contract. That is entirely legal because the employee is better off overall.

Likewise, a contract can include additional perks, such as paid study leave, extra annual leave, or flexible work arrangements. These benefits go beyond the award, so there is no conflict.

Awards set minimum conditions

Modern awards are safety nets. While contracts spell out the individual relationship, awards create a baseline of minimum employment standards. Employers and employees can’t privately agree to conditions below this minimum, even if both parties sign the contract.

For example, a contract can’t legitimately remove weekend penalty rates required under an award. Doing so would breach the Fair Work Act and could expose the employer to underpayment claims.

If terms conflict, the award usually wins

When a contract and an award cover the same matter — for instance, pay for weekend shifts — the award condition applies if the contract offers less. The award prevails because the Fair Work Act enforces its minimum standards.

In practice, this means that any term in a contract that undercuts the award will be invalid and replaced by the relevant award entitlement. Both the employer and employee must follow the higher standard.

Situations where awards don’t apply (“award‑free” employees)

Some employees are not covered by any modern award — commonly referred to as award-free employees in Australia. According to the Fair Work Ombudsman, this category includes:

• Senior managers or executives who have significant control or autonomy over their work
• Employees in industries or roles not yet covered by a modern award
• High‑income employees who earn above the Fair Work high‑income threshold and whose agreement or role is not bound to an award

Even though these employees are award‑free, they still enjoy the NES, which includes ten minimum entitlements like annual leave, maximum weekly hours, parental leave, and notice of termination. They must also receive at least the national minimum wage, reviewed yearly by the Fair Work Commission.

Examples: when awards override the contract

Let’s look at some concrete yet hypothetical examples of when awards matter more than an employment agreement. 

Example 1: Lower penalty rates in the contract

A retail employee’s contract states that work on Saturdays is paid at the standard hourly rate. The Retail Award requires a 25% penalty for Saturday shifts. The award overrides the contract, and the employee is still entitled to the higher penalty rate.

Example 2: Fewer breaks than allowed by the award

A cafe worker’s employment contract states that they must work six hours without a break. The Hospitality Award mandates a 30‑minute break after five hours of work. The award term overrules the contract, and the employee must receive their break.

Example 3: Missing allowances in the contract

An aged‑care employee’s contract doesn’t mention a uniform allowance. However, under the Aged Care Award, this allowance must be paid. Even if it’s omitted from the contract, the employee still receives the allowance under the award.

These examples demonstrate how awards continue to coexist with contracts. Employers cannot “contract out” of award entitlements.

It’s crucial that, as an employee, you review your employment contract rights, and, as an employer, you prepare legally sound and updated contracts that align with modern award entitlements. 

Situations when employment contracts offer better conditions than an award

If a contract provides better pay or benefits than the award, that’s entirely lawful. In that case, the employee is simply better off overall.

For example, some full‑time employees receive an annualised salary that includes compensation for overtime, penalties, and allowances. As long as the wage is high enough that the employee is still better off than if each award entitlement were paid separately, the arrangement complies with the award.

However, employers must regularly review these arrangements and maintain accurate time and pay records. If the salary leaves the employee worse off, back payments may be required to meet the award minimums.

How to check if you’re covered by an award

Follow this four‑step checklist to confirm your award coverage:

1. Find your industry: Identify the main industry your employer operates in; for example, retail, hospitality, education, or construction.
2. Match your job classification: Within the award, locate the classification that describes your role and level of skill or responsibility.
3. Confirm your duties align with the classification: Read the job description in the award to see if it reflects what you actually do at work.
4. Verify pay rates and allowances: Use the Fair Work Pay Calculator to ensure you are paid at least the correct rate for your classification, including penalties and allowances.

If you can’t find a matching award or classification, contact the Fair Work Ombudsman or an employment lawyer for help.

Common mistakes employers make (and how to avoid them)

Are you an employer navigating modern awards? Here are some key considerations to help you avoid potential penalties, back pay, and legal issues. 

Assuming a contract replaces an award

Some employers mistakenly believe that a contract supersedes the award. This is incorrect — the award always applies if the employee’s role falls within its coverage. 

To avoid breaches, employers should reference the award in the contract and confirm that it meets all award entitlements.

Incorrect job classification

Placing an employee in the wrong classification level can lead to underpayment. For example, classifying a Level 4 worker as Level 2 under the Hair and Beauty Award may significantly reduce their hourly rate. 

Reviewing job duties against award definitions helps prevent mistakes.

Using outdated wage rates

Each July, the Fair Work Commission updates minimum pay rates for most awards. Employers who fail to apply these increases risk underpaying staff.

Keeping rates up‑to‑date ensures compliance with current award requirements.

Not passing on penalties or allowances

Sometimes employers overlook allowances or penalty rates, especially for weekend work or split shifts. 

Even if wages seem high on paper, those entitlements remain mandatory under the award unless a lawful annualised arrangement is in place.

Using old contract templates

Employers often reuse contract templates that reference outdated awards or omit new entitlements added after recent Fair Work reviews. 

Updating contracts to reflect current award conditions in Australia helps avoid unintentional breaches.

FAQs

Does signing a contract remove award entitlements in Australia?

No. If your job falls under a modern award, you stay covered no matter what your contract says.

Can my employer pay me less than the award if I agree?

No. Even if you consent, the law doesn’t allow pay below the award rate.

What happens if my contract conflicts with the award?

The award term overrides the contract, and your employer must meet the higher standard.

What if my employer says I’m award‑free?

Check the Fair Work Ombudsman’s website or contact them directly. Some employers incorrectly assume award‑free status.

Do contractors fall under awards?

No, genuine independent contractors are not covered by awards. However, if someone is called a contractor but functions like an employee, they may be deemed an employee and entitled to award conditions.

Modern award compliance checklist for employers and employees

Use this simple checklist to confirm compliance: 

• Are you covered by a modern award?
• Does your employment contract reference the correct award?
• Do your contract terms meet or exceed all award conditions?
• Are your pay rates and allowances updated each year when awards increase?
• Have you confirmed that breaks, penalties, and overtime are being applied correctly?
• If you are award‑free, are you being paid at least the national minimum wage?
• Are both parties aware of their rights under the National Employment Standards (NES)?

Conclusion 

Award coverage can become complex, especially for roles that don’t fit neatly within one industry or classification. 

Senior employees, professionals, or managers may sit on the border between being covered and being award‑free. Likewise, some new industries (such as emerging tech or influencer marketing) may have unclear award coverage.

If you are unsure whether an award applies or if your contract terms meet minimum standards, it’s wise to seek professional advice. You can connect and hire an employment lawyer through Lawpath.