Award coverage: getting it right

Getting Award coverage right is not only an employer’s lawful obligation…it could save your business up to $666,000 in penalties!

Modern awards (awards) are legal documents defining the minimum terms and conditions of employment for employees within a particular industry or profession. There are more than 120 awards that cover most people who work in Australia.

Modern awards provide entitlements such as:

• pay
• hours of work
• rosters
• breaks
• allowances
• penalty rates
• overtime

Coverage in most modern awards is defined according to industry. Some modern awards however, apply on an occupational basis.

Every award contains content identifying who the award covers. This is usually contained in:

• the Coverage clause (usually clause 4); and
• the job Classifications (usually in the pay clause or a schedule at the rear of the Award).

To determine the award that covers an employee it’s necessary to define the major, substantial or principal aspect of the work performed by the employee, including the amount of time spent performing particular tasks, the circumstances of the employment and what the employee was employed to do. The actual duties attached to the position are key in determining the applicable award, rather than the position title.

If you cannot identify an industry-specific award to a particular position – or if there is a specific industry award but it does not cover all workers in a business (eg. it might cover Operations staff but not Administration staff) –  next consider if an occupation-related award (such as the Clerks Private Sector Award) might apply to all or some workers.

It’s important to recognise that awards do not apply when an employer has a registered agreement in place.

Understanding which award (if any) covers each of your employees is a critical first step in terms of ensuring legislative compliance. Each modern award has different rates of pay, different classification structures, different penalties, loadings and allowances; and different procedural rules.

Employers who fail to identify the correct Award can significantly expose their business to prosecution and penalties, including financial penalties of up to $13,320 for individuals and up to $66,600 for a corporation…per contravention. A pattern of contraventions may amount to a “serious” contravention, which can attract penalties of up to $133,200 for an individual and $666,000 for a corporation.

Like some help in figuring out award coverage for your business? Bare Bones Consulting can assist with an audit of your HR documents, procedures and systems to ensure you’re on the right track. We’ll review your current HR function, identify what you need to improve and provide you options to make your life easier. And everyone needs an easier life at the moment, right?