Modern Awards

Modern Awards

Awards are the safety net that underpins all Australian workplaces. They set out minimum wage rates and conditions of employment for workers in particular industries and occupations.

Almost one in five workers are still directly covered by awards. Awards are the base standard against which all agreements are tested.

At the start of 2010, a streamlined modern award system began operating. Over time, modern awards will provide a stable and secure safety net and will enhance compliance by employers.

Unions are determined that no worker be left worse off as a result of award modernisation, and will vigorously pursue any employer who uses modern awards to cut pay or rip off workers.

The award system
For more than 100 years, the award system has provided an important safety net for Australian workers. 
Industrial awards have been created and updated by the Australian Industrial Relations Commission (now called Fair Work Australia) so as to provide minimum standards of employment for various industries or occupations. 

Two of the earliest award decisions established the concept of the living wage, and the standard working week.

Over the years, awards have evolved to include a range of basic entitlements such as rates of pay, minimum and maximum working hours, annual leave, redundancy provisions, and penalty rates for overtime, weekend or night work.

Since the introduction of enterprise bargaining in the early-1990s, the numbers of workers dependent on awards has steadily declined. The proportion of workers dependent on awards for their wages has fallen from 33% in 1995 to 17% today. Nevertheless, the award safety net remains critical to decent work for almost two million people, and underpins agreement-making. 

Award modernisation
Following its election in 2007, the Rudd Government directed the Australian Industrial Relations Commission to review existing awards and create a new set of modern awards to apply nationally.

The award modernisation process began in March 2008. The Commission reviewed more than 1500 awards and subsequently created 122 modern awards that came into effect on 1 January 2010. 

The content of modern awards is based on existing standards which have been distilled from numerous state and territory awards.

Modern awards contain transitional provisions which phase in changes to wages, loadings and penalties over a five-year period.  The phased rates come into effect in July 2010.

Unions were involved in every stage of the review, making detailed submissions on dozens of awards and representing workers at Commission hearings.

Unions believe that workers will benefit from the streamlined award system, which provides a stable and secure safety net and enhances compliance by employers. 

In many cases, the review of awards has resulted in increased take home pay and better conditions for workers.

But there have also been some disappointing decisions that should have delivered a better outcome for low-paid workers. In these cases, unions will vigorously seek to maintain current pay and conditions, and push for improvements in future.

Impact on take home pay
The Fair Work Act explicitly states that award modernisation is not intended to result in reductions to take home pay.

There is no reason why employers should cut pay when a modern award begins.

Where, contrary to the intended operation of modern awards, an existing employee does suffer a reduction in take home pay, the employee is entitled to seek take home pay orders from Fair Work Australia to remedy the loss. Unions can also lodge applications on behalf of employees.

Take home pay orders continue to apply as long as an employee remains in the same job.

Modern awards also contain provisions that ensure that the take home pay of new employees is not reduced during the transition period, and enables employees to seek orders which protect their starting rate of pay.

What’s next
Unions are concerned about any outcomes from award modernisation that potentially leave workers worse off.

Unscrupulous employers that fail to provide an undertaking and then plan to cut wages and conditions can expect to face legal action, including Take-Home Pay Orders.

The ACTU and its affiliate unions have an action plan to ensure that workers are protected, with a strong focus on collective bargaining to safeguard existing pay and conditions in enterprise agreements.

Unions will:

  • Secure enterprise agreements that preserve and improve upon the existing award standards.
  • Demand and secure commitments that employers will retain current arrangements and pay levels.
  • Where undertakings are not forthcoming, obtain Take-Home Pay Orders to redress loss of pay.
  • Ensure that workers are aware of their rights and employers of their obligations not to reduce take home pay.