Understanding modern award coverage

Modern awards were introduced by the Fair Work Act 2009 (the Act) and form an important component of the Fair Work infrastructure that applies to all national system employers.

Made by Fair Work Australia (now known as the Fair Work Commission) these legally enforceable arrangements set out certain minimum conditions that workers receive in a particular industry or when working in a certain occupation.

There are total of 122 modern awards of general application in operation, having commenced operation on 1 January 2010. They replaced several thousand Federal and State Awards which previously operated throughout Australia.

Along with the National Employment Standards (NES), modern awards make up the minimum terms and conditions of employment for national system employers, including wage rates, penalties, allowances etc. Minimum wages contained in modern awards are reviewed annually by the Fair Work Commission (FWC), with decisions usually taking effect from 1 July each year. In this blog post we discuss how coverage of a modern award is determined. 

'Covers' vs 'applies'

Under the Act, modern awards can either ‘cover’ an employee or ‘apply’ to them. The difference between these two options can be explained as follows:

• An award applies to the employer and employee (the instrument regulates rights and obligations)
• An award covers an employer and employee (they fall within the scope of the instrument but the award does not apply to them. For example, an enterprise agreement regulates the employee's terms and conditions of employment at an organisation),

As a result, an award can continue to cover employees/employers where an enterprise agreement is in operation, but during this time it is the agreement rather than the award that will regulate their conditions.

Coverage of modern awards

Modern awards apply to employees and employers in the national workplace relations system. A modern award, however, will not apply to an employee who is covered by an enterprise agreement or who has accepted a guarantee of annual earnings. Unlike many previous award instruments employers are not required to be named in a modern award for it to cover them.

There are however some enterprise based modern awards which only apply to the employer/s named in the coverage. For example; the Australian Broadcasting Corporation Enterprise Award 2016.

All modern awards contain a coverage clause that sets out the circumstances in which an employer or employee are covered by the terms of the award. It does this by defining industries and occupations that are covered by the award and by excluding certain employers, employees and occupations.

Modern awards are either industry or occupation or a mixture of both. They apply to employers and employees who perform work covered by the specified scope of the particular award. In general, to be covered by a modern award, an employee must:

1. be in the industry or occupation(s) defined by the award; and
2. fall within the classification structure set out in the award.

In many awards, the classification structure will not include managers, professionals or higher income employees. This means that these types of employees will not be covered by that modern award even if it applies to the industry in which they work. However, this is not true for all awards. For example, the Social, Community, Home Care and Disability Services Industry Award 2010 includes classifications for managers and professional employees.

The 3 categories of modern awards are listed in the below table:

Categories of modern awards
Award type	Explanation	Example
1.Industry awards	Cover the work performed in a specific industry	Aquaculture Industry Award 2020
2.Occupational awards	Cover occupations regardless of the industry	Clerks – Private Sector Award 2020
3.Industry/occupational awards	A hybrid of both industry and occupations awards	Manufacturing and Associated Industries and Occupations Award 2020

Determining modern award coverage

Determining the appropriate award coverage for an employee or organisation is mostly a simple process but, sometimes it can be complicated.

Investigating whether a modern award covers a workplace or employee is essentially a three-part question:

1. Is the relevant industry or occupation described in the coverage clause in the award?
2. Are the relevant employee/s classification/s described in the award (most often in a Schedule)?
3. Are there any exclusions listed in the coverage clause and if so, do they apply?

If the answers to questions 1 and 2 above are YES and no exclusions apply, the employer and employee will be covered by the award.

Determining the award coverage and classification of an employee can be complex. Members of Ai Group can contact the Workplace Advice Line on 1300 55 66 77 for assistance with any award coverage issues or questions.

Dealing with overlapping industry and occupational awards

There may be circumstances where two or more modern awards are capable of covering the work of an employee.

When this happens, the correct coverage can be determined by the following steps:

Step 1: Does one of the awards state that it prevails over the other?

For example, a registered nurse working in the disability care sector could be covered by both the Social, Community, Home Care and Disability Services Industry Award 2010 (an industry award) or the Nurses Award 2020 (an occupational award).

This conflict can be resolved by the express wording of the awards, because the Social, Community, Home Care and Disability Services Industry Award 2010 states that it will not cover an employee covered by the Nurses Award 2020.

Step 2: Does one or both awards state that they will operate "to the exclusion of any other modern award” or some similar wording?

For example, in CFMMEU v Spotless Facility Services Pty Ltd [2020] FWCFB 1235 a cleaner working at a black coal mine site was potentially covered by both the Black Coal Mining Industry Award 2020 and the Cleaning Services Award 2020.

The Fair Work Commission determined that, because the Cleaning Services Award 2020 states that it covers employees in the contract cleaning industry “to the exclusion of any other modern award”, it prevailed over the Black Coal Mining Industry Award 2020, which did not have a similar exclusionary clause.

Step 3: If neither of the above steps resolves the issue, consider which award contains the classification that is most appropriate to the work performed by the employee and the industry in which they work.

For example in TWU v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148, Customer Service Agents were employed at a supermarket to deliver goods to customers. However, their duties also included more general retail duties such as picking goods, store work and returning groceries to shelves. The court considered that both the Road Transport and Distribution Award 2020 and the General Retail Industry Award 2020 could potentially cover the work. Neither award expressly excludes the other, and both state they operate “to the exclusion of any other modern award.”

Both awards contained the standard clause to the effect that: “Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.”

The court found that the duties and the environment in which the work was performed better fit the classifications set out in the General Retail Industry Award 2020, so that was the most appropriate award.

Further information

For assistance with modern award coverage, modern awards in general or any workplace matter, Members of Ai Group can contact us or call our Workplace Advice Line on 1300 55 66 77.