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

A non award employment contract is an employment contract for a role that no modern award or enterprise agreement covers, so the contract and the National Employment Standards (NES) set the minimum terms. If an award does cover the role, signing a contract never switches it off. The award still sets the floor, and any contract term that gives less simply doesn’t count.

Here’s the uncomfortable bit. Most small business owners pick “non-award” because the role feels senior, the salary feels generous, or the template said so. Then an underpayment claim lands two years later. Checking coverage properly takes about an hour. Skipping it can cost you years of back pay.

Am I still covered by an award if I sign an employment contract?

Yes. If your role falls within an award classification, the award keeps applying after you sign. Your contract sits on top of it.

Think of Australian employment law as three layers. The NES and the National Minimum Wage form the bottom layer and apply to almost every employee in the national system. An award or registered enterprise agreement sits above that for most roles. Your employment contract comes last, and it can only add to what the layers below already give you.

That’s why a contract term like “no overtime is payable” is meaningless for an award-covered employee. The overtime clause in the award still applies. The contract term just sits there, unenforceable, until someone asks for back pay.

The same logic works for employers. Signing a contract with a staff member doesn’t give you a way around the award. It gives you a place to set out everything extra: salary above the minimum, bonuses, confidentiality, IP ownership, restraints and notice.

What is a non-award employment contract, and who actually gets one?

A non-award employment contract (also called an award-free contract) is used when a role genuinely falls outside every modern award and no enterprise agreement applies. In that case the contract does much more of the heavy lifting, because there’s no award to fill the gaps on overtime, penalty rates, allowances or breaks.

Roles that end up award-free share a pattern. The person runs something: a function, a budget, a team of managers. They make strategic calls, set their own priorities and answer to the business owner or board rather than a supervisor who checks their work.

Common examples include general managers, heads of department, senior executives and some highly specialised technical roles that no classification describes. But be careful. A title with “manager” in it doesn’t get anyone there on its own. Many awards have manager-level classifications built in, including the Hospitality, Retail and Clerks awards.

Award-covered vs award-free vs guarantee of annual earnings

This is the comparison most employers need before they choose a contract template.

Question	Award-covered employee	Award-free employee	Award-covered, with a high income guarantee
What sets minimum pay?	The award classification rate	National Minimum Wage ($26.44 an hour from 1 July 2026)	The guaranteed salary, which must be at least $190,100 a year
Overtime and penalty rates?	Yes, as set by the award	Only if the contract says so	No, the award stops applying while the guarantee is in place
Does the NES apply?	Yes	Yes	Yes
Can the contract reduce entitlements?	No	Not below the NES or minimum wage	Not below the NES
Unfair dismissal protection?	Yes, once the minimum employment period is served	Only if earnings are below $190,100	No, while earnings exceed the threshold
Right contract type	Award-compliant employment agreement	Non award employment contract	Employment agreement plus a written guarantee

How do I check if a role is covered by an award?

You don’t need a law degree for this. You need the job description, an honest look at what the person does each day, and about an hour.

1. Start with your industry. Industry awards (hospitality, retail, construction, cleaning, disability services) cover most roles in those businesses, including many supervisors.
2. Then check occupation awards. The Clerks award, Professional Employees award and similar occupation-based awards pick up roles an industry award misses. This is where most “surprise” coverage comes from.
3. Match the duties to a classification. Read the classification descriptions line by line against what the person actually does, not what the ad said.
4. Write down your reasoning. If you decide the role is award-free, record why and keep it on the employee’s file. That note is your best evidence if coverage is ever challenged.
5. Diarise a review. Roles drift. Check again every year and whenever duties change.

If you land on an award, our guide to award wages walks you through how to set pay correctly under it.

One trap to watch for: the Professional Employees award. Founders in tech, engineering and professional services assume a university-qualified hire sits outside the award system. Plenty of them don’t. Graduate-level IT and engineering roles are a regular example of coverage employers didn’t expect.

Red flags that a “senior” role is still award-covered

Before you issue a non award employment contract, run the role past these questions. One “yes” is worth a second look. Two or more and you should assume an award applies until advice says otherwise.

• Does the person spend most shifts doing the same work as the staff they supervise?
• Does someone else sign off their budget, hiring decisions or pricing?
• Is the role in an industry with its own award, like hospitality, retail, construction or care?
• Does the job need a degree in IT, engineering, science or a similar field, with no management of other professionals?
• Would the person’s pay fall below the award rate once you add overtime for the hours they actually work?

Does a high salary make an employee award-free?

No, not on its own. This is the single most common wrong assumption we hear.

The high income threshold rose to $190,100 on 1 July 2026, up from $183,100. An award-covered employee paid above it is still award-covered. What changes the position is a guarantee of annual earnings: a written promise that you’ll pay at least the threshold amount, which the employee agrees to.

While that guarantee is in place and the employee earns above the threshold, the award stops applying to them. The NES keeps applying. A few rules make the guarantee work:

• The guarantee has to cover at least 12 months, or the full period of employment if the job is shorter.
• The employee has to agree to it. Put it in the contract or a signed side letter.
• It works against a modern award only. It won’t take someone outside an enterprise agreement.
• Earnings are measured on the salary and certain non-cash benefits, not bonuses or commission you can’t calculate in advance. Super contributions you’re legally required to make don’t count either.

The trade-off employers miss: an award-free employee earning above the threshold can’t bring an unfair dismissal claim. An award-covered employee paid $250,000 without a guarantee still can. If a senior hire is on a big salary and you’ve never signed a guarantee, that protection is still live.

What must a non award employment contract include?

With no award in the background, your non award employment contract is the main document the relationship runs on. Vague wording that an award would have quietly fixed now becomes a dispute. Cover these at minimum:

• Pay and super. State the base salary, whether it’s inclusive or exclusive of super, and the pay cycle. The salary must be at least the National Minimum Wage for the hours worked.
• Hours and additional hours. Set ordinary hours (38 a week for full-time is standard) and say plainly that the salary compensates for reasonable additional hours. The NES caps what’s “reasonable”, so don’t treat this as unlimited.
• Leave. Annual, personal/carer’s, compassionate, family and domestic violence leave and public holidays all come from the National Employment Standards. You can give more, never less.
• Notice and redundancy. Match or beat the NES notice periods. Senior roles often carry longer notice plus a garden leave option.
• Confidentiality, IP and restraints. These matter more for senior hires, who walk out the door with the most knowledge.
• An award-coverage statement. Record that you’ve assessed the role as award-free and why. It won’t bind a court, but it shows you did the work.

Give every new starter the Fair Work Information Statement too, and the Casual Employment Information Statement for casuals. Award-free casuals still get a 25% casual loading on top of the minimum wage.

Example clauses you can adapt

These are illustrations only. Your final wording should fit the role, the salary and your appetite for risk.

Additional hours: “Your ordinary hours are 38 per week. The role will sometimes need reasonable additional hours. Your salary has been set with those hours in mind, and no separate overtime payment applies.”

Award coverage: “We have assessed your role as not covered by a modern award or enterprise agreement, based on the duties in Schedule 1. If your duties change, we will reassess coverage and tell you the outcome in writing.”

Guarantee of annual earnings (award-covered roles only): “We guarantee to pay you earnings of at least $[amount] for the 12 months from [date]. You agree that, while this guarantee applies, the [name of award] does not apply to your employment.”

Lawpath’s full-time employment agreement template covers the core terms for most hires. For senior roles with bonuses, share schemes or vehicle benefits, the long-form employment agreement gives you the extra room.

Does an employment contract override an award?

Never. Under the Fair Work Act 2009 (Cth), an award’s terms apply to a covered employee regardless of what the contract says. The contract can pay more. It can’t pay less.

What a contract can do is roll award entitlements into a higher salary. That’s the job of a set-off clause: the employee agrees their above-award salary covers overtime, penalties and allowances. Our guide to set-off clauses in employment contracts explains the mechanics.

Those clauses got a lot narrower in September 2025. In the Woolworths and Coles underpayment case, the Federal Court held that set-off only works within the same pay period. Paying extra in a quiet fortnight doesn’t cover what an employee was owed in a busy one, even if the annual total comes out ahead.

So if you pay an award-covered employee a salary, you now need to reconcile every pay period and keep proper time records. “They’re on a good salary” is no longer a defence.

There are two legitimate ways to vary award terms. An individual flexibility arrangement lets you and one employee change certain award terms, provided they end up better off overall. A registered enterprise agreement replaces the award entirely while it applies, but it has to pass the better off overall test. For most small businesses an enterprise agreement is more process than the problem justifies.

What happens if you get award coverage wrong?

You owe the difference. Fair Work, or a court, will work out what the employee should have received under the correct award and classification, then compare it to what you actually paid. Overtime, penalty rates, allowances and annual leave loading all go into that sum.

Since 1 January 2025, intentionally underpaying an employee has been a criminal offence. Honest mistakes aren’t caught by that offence, and small businesses that follow the Voluntary Small Business Wage Compliance Code get extra protection. Civil penalties and back pay still apply to genuine errors, though.

If you find an error yourself, fix it fast. Work out the shortfall, back-pay the employee, explain it in writing and correct the contract going forward. Self-identified and promptly fixed errors are treated very differently to ones an ex-employee brings to Fair Work.

What we see in Lawpath consultations

Award coverage comes up constantly in our employment consultations. Four patterns stand out.

The contract names the wrong award. We regularly see contracts that nominate an award which doesn’t fit the work, such as a trade business naming a neighbouring industry award. Fair Work ignores the label. It assesses the employee under the award that actually covers them, and the gap becomes back pay.

Salaried staff with no time records. Employers paying a flat salary tend to stop recording hours. Then a former employee claims unpaid overtime and the business has nothing to rebut it with. Keep time and attendance records for salaried staff too. The 2025 Federal Court decision made this non-negotiable.

“Minimum award entitlements apply if relevant.” A contract that gestures at the award without naming one or a classification leaves every question open. We see these clauses surface in underpayment claims raised after employment ends, often while the business is still chasing the return of a laptop.

Over-award rates that don’t absorb enough. Paying a flat rate “above award” only works if it covers the base rate plus every allowance and penalty the employee would otherwise earn. Where it falls short, our lawyers recommend calculating the gap, back-paying it and issuing updated contracts that spell out exactly what the higher rate covers.

Two examples: award-free or not?

Example 1. A Sydney restaurant group hires Alex as its operations director. Alex oversees four venues, sets budgets, hires and manages the venue managers and reports to the owners. The Hospitality Industry (General) Award 2020 covers most hospitality staff and some management levels, but not senior managers running a business at this level. No other award fits, and the business has no enterprise agreement. Alex is award-free. His non award employment contract, the NES and the minimum wage set his entitlements.

Example 2. The same group hires Priya as “venue manager” on $85,000. Priya works the floor most shifts, supervises staff and handles rosters, but the owners approve every major decision. Her job title sounds senior. Her duties sit squarely within the award’s managerial classifications. She’s award-covered, so a non-award contract would leave the business exposed on overtime and penalties.

Same business, same title family, different answer. That’s why duties always win.

Frequently asked questions

What is a non award employment contract?

It’s an employment contract for a role no modern award or enterprise agreement covers. The contract, the NES and the National Minimum Wage set the employee’s minimum terms. Overtime and penalty rates only apply if the contract includes them.

How do I know if I’m covered by an award?

Check your industry award first, then occupation awards like the Clerks or Professional Employees awards. Compare the classification descriptions to what you do each day. If your duties match a classification, you’re covered, whatever your job title or contract says.

Can my employment contract remove my award entitlements?

No. A contract can’t make an award-covered employee worse off than the award. Any term that tries to is unenforceable, and the award entitlement still applies. The only exceptions are a valid individual flexibility arrangement or a registered enterprise agreement.

What is the high income threshold for 2026-27?

It’s $190,100 a year from 1 July 2026. An award-covered employee paid above it only stops being covered by the award if the employer gives a written guarantee of annual earnings of at least that amount and the employee agrees to it.

What’s the minimum pay for an award-free employee?

From 1 July 2026, the National Minimum Wage is $26.44 an hour, or $1,004.90 for a 38-hour week. Award-free casuals also receive a 25% casual loading. Employers must pay superannuation on top.

Do award-free employees get overtime?

Only if their contract says so. There’s no automatic overtime or penalty rate for award-free staff. Most non-award contracts state that the salary covers reasonable additional hours, and the NES limits what counts as reasonable.

Does an enterprise agreement override an award?

Yes. While a registered enterprise agreement applies to an employee, the modern award doesn’t. The agreement must pass the better off overall test before Fair Work approves it, so employees can’t end up worse off than under the award.

Do I need a new contract when award rates go up?

No. Annual wage review increases apply automatically from the first full pay period on or after 1 July. A short letter telling staff their new rate is enough, and you don’t need their signature for an award-driven increase.

Get the contract right from day one

If you’ve been unsure whether your team is award-covered, you’re in good company. Plenty of experienced business owners have never checked. The fix is one honest review of each role, a correctly matched contract and a yearly check-in. That’s it.

Lawpath keeps the whole thing in one place. Pick from our employment agreement templates, tailor them in minutes, and book a lawyer when a role sits in the grey zone. Start your Full Time Employment Agreement today.