For the majority of employees and employers, their employment will be covered by a modern award. But, once you sign an employment contract, does this mean that the modern award will no longer apply? Does the modern award form part of your employment contract or is it a safety net? In this article, we delve into the purpose of the modern award and explain its applicability to employment agreements or contracts.
What is a Modern Award?
A modern award is an instrument that sets out the minimum terms and conditions of a certain type of employment. Modern awards apply national and therefore create national minimum standards. Modern awards help employees to understand the minimum entitlements that they must legally receive from their employer. Furthermore, these modern awards also help employers understand what these minimum entitlements are, ensuring they are not undermining or breaching these national standards. However, not every single employee or employer will be covered by a modern award. To check your eligibility, you can use this Tool. Accordingly, if a modern award if found to apply to your employment or industry, then the award will outline entitlements regarding:
- Pay (i.e. minimum wage)
- Hours of work,
- Penalty Rates and,
Now, it is important to remember that modern awards create minimum entitlements. Therefore, an employer may offer an employee greater entitlements. However, an employer cannot offer an employee any less than the modern award stipulates.
Does a Modern Award apply to me?
In total, there are more than 120 modern awards. For a full list of the modern awards currently in place, see this list.
However, a modern award will not apply to an employee if their annual income exceeds $158,500 (applicable as of 1 July 2021). Furthermore, a modern award will not apply to an employee or workplace if their workplace has implemented its own enterprise agreement.
Is the Modern Award part of the Employment Contract?
So, you’ve started a new job. You’ve received a new employment contract. This new employment contracts contains a list of entitlements, wages, penalty rates, sick days ect that you will receive. You begin to wonder whether the modern award for your industry will still apply if you sign this new employment contract. Well, just because you sign an employment contract, does not mean that your modern award will not apply. This is because the standards and entitlements set by the modern award cannot be contracted out of. In most cases, your employment contract will actually expressly refer to the modern award by saying “these entitlements…are in accordance with [applicable modern award]“. Thus, the modern award, or the provisions of the award referred to, will form part of the employment contract.
Your new employment contract has provided you with 7 days of sick leave. However, the modern award that governs your industry states all employees must receive 10 days of sick leave. In this instance, your employment contract is offering entitlements below the modern award. Thus, you will be entitled to the full 10 days, as stipulated by your modern award.
Therefore, the modern award works as a safety net in that is safe guards against any employment contracts intentionally, or accidentally, offering less than ideal employment conditions.
Modern awards set the basic and minimum entitlements that all employees must receive as a result of their workplace or industry. These minimum entitlements cannot be contracted out of, unless the award allows. Of course, your employer may offer you higher entitlements than the modern award provides. However, offering lesser entitlements is a serious breach and can result in hefty civil penalties and liabilities.