Are you at risk of breaching a Modern Award?

Although the Award system, in one form or another, has been a feature of Australian employment regulation for a very long time, this does not mean that everyone is aware of how it operates and when their employees may be covered by a Modern Award.

It is difficult to generalise about who is and who is not covered by an Award. However, it is safe to say that employees undertaking ’blue collar’ work, clerical work or non-managerial work in most industries, eg nursing, child care, hairdressing, hospitality, retail etc are more likely than not to have Award coverage. There are exceptions to the above generalisation as well, as some Awards cover very senior employees including managerial employees.

If you assume that some, if not all, of your employees may well be legally covered by a Modern Award, are you complying with your obligations under that Award?  Not knowing that your employees are actually covered by a Modern Award is only one of the risks.  We often see employers who are aware that there may be a Modern Award that might cover their employees, but they do not realise that if that is the case it is compulsory to provide the terms and conditions contained in the Award and mistakenly believe that coverage of the Award is voluntary.

The next risk group we see are those who know there is Modern Award coverage but believe that they can easily ’buy out’ the Award coverage by paying a bit more than the Award rate, or alternatively designating the employee to be a salaried employee. Unfortunately for this group of employers it is not that easy to avoid Award coverage and the legal obligation to pay and provide the terms and conditions contained in the Modern Award.

The reality is that if a particular type of work is covered by a Modern Award, then the employee engaged to do the work has a legal entitlement to the benefits of the Award terms and conditions.  This does not mean that there are no legitimate ways to offset some Award conditions and increase flexibility and productivity in the workplace or remove barriers created by rigid Award conditions. However, any such strategies need to occur within a legally compliant framework.  

Achieving improvements in flexibility and productivity is eminently achievable with a little innovative and creative thinking mixed with a comprehensive understanding of employment law.  One without the other is a recipe for disaster.  

If you are not sure if your employees are covered by a Modern Award or if you are one of those employers who think they have escaped Award coverage by paying a bit more or designating employees as ‘salaried’, you may find that you are operating in breach of the Award and/or unintentionally underpaying employees or denying employees legally enforceable conditions of employment.  Breaching Modern Award conditions can result in prosecution by the Fair Work Ombudsman as well as significant financial penalties.

Modern Award coverage is just one of the many risks that employers face in navigating their way through the complexities of the employment relations system. Follow the below link to undertake a free assessment of a broader range of employment risks https://mazarshr.com.au/hr-risk-check/.

If you are now unsure if you are breaching your obligations for Modern Award coverage and you would like some assistance in understanding your risk, please contact Cheryl-Anne Laird, Partner of our Human Resources and Industrial Relations Consulting team on +61 7 3218 3014 or Cheryl-Anne.Laird@mazars.com.au

Published: 29/01/2019

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