With special thanks to our Australian colleagues Michael Michalandos and Carmel Foley for this post.
This briefing contains a summary of everything an employer in Australian needs to know about the operation of the award system.
Why this is important?
We have prepared this briefing because there has been a high incidence of employers in the information technology industry failing to have regard to the application of modern awards in their workforce or misunderstanding how these awards operate. In particular, many employers have issued employment contracts which do not identify the applicable award and do not contain provisions which comply with the award.
This may result in a potentially serious compliance issue which could cost the business a significant amount of money in terms of back-payments, penalties, and potential reputational damage.
What is an award?
Modern awards (or, simply, “awards”) are industrial instruments created by the Fair Work Commission (FWC) that set and regulate minimum terms and conditions of employment for certain employees in Australia. Currently, there are 122 awards and almost all businesses in Australia will employ award-covered employees. Awards operate in a similar way to legislation and their application can only be circumvented in very limited circumstances.
Who do awards cover?
Awards generally fall into one of two categories: “industry awards” or “occupational awards.” Some awards apply on both an industry and occupational basis, for example the Professional Employees Award 2010 (Professional Employees Award) which, for example, covers engineers on an occupational basis but also covers employers operating in the “information technology industry” (as defined) on an industry basis.