Employment Law: Awards

What is an Award?

An Award is the minimum entitlements and conditions an employee is required to be given in the course of their employment for a specific industry. Awards are set and reviewed by the Fair Work Commission, and not every industry is covered by an Award.

Some examples of Awards include:

Aged Care Award – covers employees working in the Aged Care Sector
Building and Constructions On-Site Award – covers employees working on site in the building, engineering and civil construction industry
Children Services Award – covers employees working in children services and early childhood education industry.

What’s included in an Award?

Awards cover various conditions of employment and the minimum remuneration that an employee is entitled to receive.

This includes:

Minimum wage and hourly rate for different classifications of employees
Overtime rates
Penalty rates
Hours that can be worked
Breaks
Leave and leave loading
Various allowances such as first aid, meal, travel and temperature allowance
Termination

Do I need to follow the Award when employing someone?

Yes you must provide your employee with the conditions and entitlements as set out in the Award they are covered by. There is however scope to negotiate an ‘Individual Flexibility Arrangements’ which can vary some of the terms and conditions of employment under an Award including arrangements for when work is performed, overtime rates, penalty rates, allowances and annual leave loading.

However, any agreement must see the employee ‘better off overall’. This means that you cannot pay an employee less than they are entitled to under an Award just because your employee agrees to this. An Agreement must also be in writing and the employer and employee must genuinely agree it, without duress or coercion.

Often, an employer and employee will enter an employment contract which differs from an Individual Flexibility Arrangement. An employment contract (or agreement) will often set out the hours of work, role, termination notice, and remuneration of an employee.

Sometimes in a contract an employee will offer what is called an ‘inclusive salary’ or ‘annualised salary’. That is, rather than separately paying an employee overtime, penalty rates, leave loading and allowances, an employer will offer an annual salary which takes into account all theses payments and will work out higher then the Award minimum hourly rate.

An employer still needs to take care that any annualised salary takes into account all the entitlements an employee has under an Award. An employee cannot ‘contract out’ of their minimum Award entitlements and an employer may be liable for an underpayment of an employee if they have not ‘covered off’ all entitlements with the employee’s salary.

What if my employee is not covered by an Award?

Sometimes an employee is not covered by an Award, however they are still covered by the National Employment Standards which are contained in the Fair Work Act 2009 and the national minimum wage.

These standards provide for:

Maximum weekly hours – for full time employees this is 38 weekly hours of work, plus reasonable extra hours.
Flexible working arrangements – Employees can in some situations request flexible working arrangements.
Changing from being a casual employee to a permanent employee (‘casual conversion’)
Parental leave, annual leave, personal/carers leave and other leave entitlements all employee’s are entitled to
Notice of termination an employer must give an employee and applicable redundancy pay
The Information Statements that employers must provide to all new employees.

HELP! I think I’ve breached an Award an Underpaid an Employee!

If you think you have underpaid an employee, you should take immediate steps to rectify the underpayment.

You should first calculate how much an employee was entitled to be paid under the award during the relevant underpayment period. You then need to determine the gross amount the employee was paid and subtract this from the amount you determined the employee was meant to be paid.

You should communicate openly with your employee and provide them with the figures and calculations as to how you came to the amount they were underpaid.

If you cannot afford to repay the employee the entire underpayment amount then you should seek a written agreement with your employee as to the frequency, amount, and method which you will pay the underpayment to the employee.

Should you require assistance with determining which Award your employee is covered by, or if you’re an employee, whether you are receiving all your entitlements under an Award, contact our expert team and book an appointment today.

Check out some of our other resources including information on Employment Law, The COVID-19 Vaccine – Employer/Employee Rights and Obligations, From Hiring to Firing: by Nicole Doyle, Enterprise Agreements,