Back to GlossaryIn Australia, modern awards are legal documents that set minimum employment standards for specific industries or occupations. They are part of the national workplace relations system and are administered by the Fair Work Commission.
What is a modern award in Australia?
Modern award in Australia is a legally binding document that outlines the minimum pay and working conditions for employees working in a specific industry or occupation. These awards are part of the national workplace relations system and are created and maintained by the Fair Work Commission, Australia’s independent workplace tribunal.
In 2010, the award system was overhauled as part of the Fair Work Act 2009. This reform reduced the number of awards and created a simpler, nationally consistent system called Modern Awards. Today, there are about 120 modern awards, each covering a specific industry or group of job types. This national approach makes it easier for employers to understand and apply the correct rules across their workforce.
Modern awards provide the basic conditions of employment for employees in many Australian workplaces. They are intended to:
- Set minimum pay rates based on job type, experience, and industry.
- Outline standard working hours and overtime rules.
- Define casual, part-time, and full-time arrangements.
- Establish entitlements like annual leave, sick leave, and public holidays.
- Clarify penalty rates, such as higher pay for weekends or night shifts.
- Provide rules for resolving disputes between employers and workers.
Modern awards work alongside the National Employment Standards (NES), which apply to all workers in Australia. While the NES provides general protections (like maximum weekly hours or parental leave), the award adds more detail based on the type of work an employee does.
Modern awards generally apply to employees based on:
- Industry (e.g. retail, hospitality, construction).
- Occupation (e.g. clerical, nurses, electricians).
Who is covered by modern awards in Australia?
Most employees in Australia are covered by a modern award, particularly in roles that are not senior or highly specialised. However, some employees are not covered, such as:
- Full-time, part-time, and casual workers.
- Private sector employees across a wide range of industries.
- Entry-level to mid-level roles, including trades, customer service, administration, and care work.
However, not everyone is covered:
- Award-free employees, such as some professionals, managers, and senior executives, may instead be covered by the National Employment Standards (NES) and the terms in their individual employment contract.
- High-income earners (those above a certain salary threshold) may also fall outside the scope of modern awards, depending on their role and agreement.
For employees, modern awards protect their rights and entitlements based on the work they perform.
Who sets modern awards in Australia?
Modern awards are created, reviewed, and maintained by the Fair Work Commission (FWC). The Fair Work Commission is the national workplace relations tribunal, responsible for setting minimum standards that apply across industries and occupations.
Established under the Fair Work Act 2009, the Commission operates independently of government and plays a central role in managing Australia’s workplace system. One of its key functions is to ensure that all modern awards remain up to date, fair, and relevant to current work practices, employment trends, and economic conditions.
Modern awards are not set by individual employers or unions, but through a formal process led by the Commission. This involves:
- Regular award reviews, where stakeholders (including employer groups, unions, and government bodies) can propose changes or raise concerns.
- Consultations and public submissions, ensuring transparency and fairness.
- Decisions based on evidence, balancing the needs of both employees and employers.
The goal of the Fair Work Commission in managing modern awards is to maintain a system that protects minimum employment standards while allowing businesses to operate competitively.
For employers, understanding that the Fair Work Commission is the official source of all modern awards helps ensure that you’re relying on accurate, legal information, not outdated advice or informal interpretations. All current awards, along with updates and changes, can be accessed directly through the Fair Work Commission website.
How do I know which modern award in Australia applies to me?
Determining which modern award applies to a particular job or workplace can be challenging, particularly for employers managing multiple roles or for individuals working in broad or overlapping industries. To help with this, the Fair Work Ombudsman provides a useful online resource called the “Find my award” tool.
This tool guides users through a set of questions about the job or business, such as:
- The industry the business operates in.
- The type of work performed.
- The employee’s main duties and responsibilities.
Based on this information, the tool will suggest the most relevant modern award, along with a link to the official award document. From there, users can review the specific pay rates, working conditions, and entitlements that apply under that award.
Using this tool is a practical way for:
- Employers to confirm their obligations and avoid non-compliance.
- HR teams to align their employment practices with legal standards.
- Employees to understand their rights and entitlements.
Since modern awards are updated from time to time, it’s important to use current and reliable information. The Fair Work Ombudsman regularly maintains its website, making it a trusted source for award-related guidance.
Who modern awards apply to
Modern awards apply to a wide range of workers across Australia and are grouped by either industry or occupation. This structure ensures that employees receive minimum pay and working conditions that reflect the type of work they do and the sector they’re in.
There are two main types of modern awards:
- Industry-based awards apply to workers based on the sector their employer operates in. For example, someone working in a retail store would likely be covered by the General Retail Industry Award, regardless of whether their specific job is sales, admin, or stock handling.
- Occupation-based awards apply to workers based on their role or duties, no matter what industry they work in. For instance, administrative staff may be covered by the Clerks – Private Sector Award even if they work in a legal firm, construction business, or tech startup.
In some cases, both the industry and occupation may be considered when determining the right award. It’s important to look at the main duties of the job, not just the job title or the company’s name.
Understanding whether an award applies is important, especially for employers, to ensure compliance with pay and workplace obligations.
Are all employees covered by a modern award in Australia?
Most employees are covered, but some senior executives, high-income earners, or award-free roles may not be.
While modern awards cover the majority of employees in Australia, not every worker falls under an award. Understanding who is and isn’t covered is important for both employers and employees, especially when determining entitlements like pay rates, working hours, and leave conditions.
Who is covered by modern awards in Australia?
Most employees in the national workplace relations system are covered by a modern award. This includes workers in industries such as:
- Retail
- Hospitality
- Healthcare and aged care
- Construction and trades
- Administration and clerical work
- Cleaning, logistics, and warehousing
- Childcare and education
These awards set out the minimum pay and conditions that must be provided by law, including overtime rates, penalty rates for weekend work, allowances, and leave entitlements.
Modern awards apply to:
- Full-time, part-time, and casual workers.
- Entry-level and mid-level roles.
- Employees whose job duties match the classification levels outlined in an award.
Who isn’t covered by a modern award in Australia?
Some roles are classified as award-free, meaning no modern award applies to their job. These employees are still protected by the National Employment Standards (NES) and any terms agreed to in their employment contract, but they don’t receive extra conditions from an award.
Award-free employees typically include:
- Senior executives and high-level managers who have decision-making responsibilities or lead a business unit.
- High-income earners whose salary exceeds the high income threshold set by the Fair Work Commission (indexed annually).
- Certain professional roles—such as some legal, accounting, or specialist IT jobs—depending on the nature of the duties and the business.
Just because a job title sounds senior doesn’t automatically make someone award-free. It depends on the actual duties performed, so it’s important to check carefully.
For employers, misclassifying an employee as award-free can lead to underpayments, legal disputes, or penalties, especially if that employee should have been receiving award entitlements like overtime or allowances. For employees, knowing whether you are covered by a modern award helps you understand your rights and what you’re legally entitled to.
What happens if an employer ignores the modern award in Australia?
They may face legal action, financial penalties, and be required to back-pay affected workers.
Failing to comply with a modern award is not only unfair to employees—it can also lead to serious legal and financial consequences for businesses. In Australia, modern awards are legally binding, which means employers are required to follow the pay rates and conditions set out in the relevant award. Ignoring these obligations, even unintentionally, can result in breaches of the Fair Work Act 2009.
Legal and financial risks for employers
If an employer underpays an employee or does not follow other award conditions (such as working hours, overtime, or allowances), the following consequences may apply:
Legal action
The Fair Work Ombudsman can investigate complaints or audit businesses. If a breach is found, the employer may be taken to court.
Financial penalties
Courts can issue fines against both the business and individual managers involved. Penalties can be significant, especially for serious or repeated breaches.
Back-pay orders
Employers may be required to repay any underpaid wages or entitlements to affected employees. This includes missed overtime, penalty rates, or allowances—sometimes going back several years.
Damage to reputation
Non-compliance can harm a company’s reputation, affect staff morale, and lead to public scrutiny, particularly if the matter becomes high-profile.
Compliance notices and enforceable undertakings
In some cases, the Fair Work Ombudsman may issue formal instructions to correct the breach, including mandatory training or changes to business practices.
Common mistakes that lead to modern award non-compliance in Australia
When businesses hire employees in Australia, especially for the first time, it’s not uncommon to misunderstand how modern awards work. In most cases, non-compliance isn’t intentional—it often happens because employers are unfamiliar with the details of the award system or make assumptions based on the role or salary level.
Here are some of the most frequent errors that can result in breaches of award obligations:
1. Assuming salaried employees are not entitled to overtime or penalty rates
Many employers believe that paying someone a salary covers all conditions, including overtime. However, if a salaried employee is covered by a modern award, they may still be entitled to penalty rates, overtime pay, or allowances, depending on how many hours they work and when those hours are performed. Simply offering a set salary does not automatically exempt a worker from award entitlements.
2. Using outdated pay rates
Award pay rates and entitlements are reviewed regularly by the Fair Work Commission and usually increase at the beginning of each financial year. Some businesses continue to use rates from previous years or overlook updates, especially if they don’t have a formal process for reviewing wages. This can lead to underpayments, even if the original rate was once correct.
3. Misclassifying a worker’s employment type
Incorrectly classifying someone as a casual, part-time, or full-time employee can have a major impact on their entitlements under a modern award. For example, casual workers are entitled to a loading in place of leave entitlements, while part-time workers have different rules for minimum hours and rostering. Misclassification can result in incorrect pay, missed entitlements, or breaches of contract.
4. Applying the wrong award (or no award at all)
Some employers assume that because a worker has a general job title—like “administrator,” “project officer,” or “coordinator”—they are not covered by any award. In reality, most employees are covered by either an industry-based or occupation-based award. Applying the wrong award, or failing to apply one entirely, can lead to underpayment of wages, incorrect conditions, and possible legal action.
How employers can stay compliant with modern awards in Australia
Staying compliant with modern awards is essential for any business hiring workers in Australia. Fortunately, there are steps employers can take to reduce the risk of non-compliance and ensure they meet their legal obligations:
Confirm the applicable award
Use the Fair Work Ombudsman’s “Find my award” tool to identify which award applies to each role based on the employee’s duties and the nature of your business.
Check pay rates regularly
Many businesses struggle to understand minimum legal pay rates and how they compare to what the market expects. This can lead to underpayment risks or difficulty hiring skilled workers. You can refer to the Fair Work Ombudsman’s pay guides and calculators to make sure your business is using the most up-to-date wage rates, allowances, and penalty rates for each classification.
To support employers, CXC has created a Salary Benchmark Report, which provides clear insights into current salary trends across industries. It also highlights what candidates in Australia typically look for in compensation.
With this data, your business can set pay that is both compliant and competitive. CXC combines award expertise with local market knowledge to help you hire confidently and stay aligned with legal and candidate expectations.
Keep accurate records
Maintain clear and consistent records of employee work hours, job classifications, leave balances, and pay details. Good recordkeeping helps ensure transparency and protects your business during audits or disputes.
Seek professional guidance when needed
If you are unsure about which award applies, how to classify a role, or how to interpret certain conditions, it’s wise to speak with a workforce advisor such as CXC. Getting it right from the start is far easier than fixing a mistake later.
Hire talent in Australia with confidence
Navigating Australia’s employment landscape means understanding how modern awards, pay rates, and worker entitlements apply to your workforce. Whether you’re hiring local employees or engaging talent through an Employer of Record, staying compliant is essential to avoid facing legal and financial risk.
When you partner with CXC, we’ll help you compliantly hire and manage talent in Australia by providing expert guidance on award coverage, pay benchmarking, and workforce management. From onboarding to ongoing compliance, we ensure your hiring practices align with Australian workplace laws. This way, you can focus on what matters most: growing your business. Speak to our team today.
