Australia: Modern Awards — Key Q&As

Award modernisation - what is it?

Award modernisation as the title suggests is a process involving updating and rationalising the award based system in Australia. The Australian Industrial Relations Commission (AIRC) has in accordance with the request from the Minister for Employment & Workplace Relations, been undertaking a complete rationalisation of awards in Australia with a view to having a comprehensive set of modern awards by 31 December 2009.

The procedure adopted by the AIRC involves the lodgment of proposals, submissions and other material by interested parties, pre-drafting consultations, publication of exposure drafts by the AIRC, lodgment of proposal submissions and other material in relation to drafts by the parties and further consultations. Finally publication of the modern awards by the AIRC.

Modern awards are not to contain State or Territory based differences although there is provision for such differences for a transitional period of 5 years.

When do modern awards apply?

Modern awards are intended to have a commencement date of 1 January 2010. Together with the "National Employment Standards," modern awards will provide a new safety net for workers from 1 January 2010 onwards.

Who will be covered by modern awards?

Modern awards will cover all employers in the Federal system. This will include "constitutional corporations" (such as trading corporations) and in NSW for example, other categories of employer if NSW decides to refer its powers to the Commonwealth.

Modern awards are intended to cover all industries.

Additionally, it is proposed that there will be a miscellaneous modern award which will be created to cover certain employees who are not otherwise covered by any other modern award.

What will happen to existing awards?

It is intended that by 1 January 2010 the award modernisation process will be completed and that all current awards including NAPSAs will be replaced by modern awards.

What will happen if the award modernisation process results in a reduction in take home pay of employees or out workers?

Under the transitional Fair Work Act provisions, if an employee suffers a "modernisation-related reduction in take-home pay" and certain criteria are satisfied, the employee or group of employees who suffered a reduction in take-home pay can seek an order requiring the payment of money to remedy the situation.

The transitional fair work legislation sets out criteria to be satisfied before Fair Work Australia (FWA) can make such an order including:

  • The modern award must apply to the employee;
  • The employee is employed in the same or a comparable position to that which they were employed in, prior to the introduction of the modern award;
  • The amount received by the employee has reduced despite the fact the hours have not materially changed;
  • The reduction is due to the award modernisation process.

Can employers and employees contract out of modern awards?

Modern awards will not apply in circumstances where employees earning over the "high income threshold" (being $100,000 per annum as indexed)) have agreed in writing with their employer to accept a "guarantee of annual earnings". Such employees are then known as "high income employees".

The agreement can be made either before or during the employment and must generally be for a period of 12 months or more, however it can be for a shorter period in some circumstances.

The Fair Work Act contains detailed provisions setting out what earnings should be taken into account in determining whether or not the income of an employee exceeds the high income threshold. Earnings which will not be taken into account, include: payments the amount of which cannot be determined in advance, reimbursements or employers' compulsory superannuation contributions.

The employer is before or at the time of giving a guarantee of annual earnings to the employee covered by a modern award, required to notify the employee in writing that the modern award will not apply during any period during which the annual rate of the guarantee of annual earnings exceeds the high income threshold.

Can an employer and an employee vary the effect of a modern award in order to meet their genuine needs?

"Yes". Under the Fair Work Act, an employer and employee can agree to an "individual flexibility arrangement" pursuant to a "flexibility term" in a modern award. The flexibility term must, amongst other things:

  • Identify the terms of the modern award, the effect of which may be varied by an individual flexibility arrangement;
  • Require that the employee and employer genuinely agree to any individual flexibility arrangement;
  • Require the employer to ensure that any individual flexibility arrangement must result in the employee being better off overall than the employee would have been if no individual flexibility arrangement had been agreed to.

It should be appreciated that if an employer has agreed to such an arrangement the modern award has effect in relation to the employee and the employer as if it were varied by the flexibility arrangement and such arrangement is for the purposes of the Act taken to be a term of the modern award. Such arrangement does not change the effect of the modern award in relation to any other employee.

How do modern awards interact with pre-existing industrial instruments?

Pre-reform certified agreements, collective agreements and State enterprise bargaining agreements will continue to operate from 1 January 2010 as "transitional instruments". AWAs and ITEAs will continue to operate as transitional instruments. There will be no new statutory individual agreements.

It should be noted that from 1 January 2010 employees must receive the minimum rate of pay in an applicable modern award even if they are covered by a transitional instrument.

What things should an organization be considering with respect to modern awards?

  • Review the modern awards applicable to your industry and assess their impact on your business;
  • Consider which employees may be made subject to a guarantee of annual earnings (employees who earn over $100,000 as indexed) to avoid the application of an applicable modern award;
  • Consider whether it may be appropriate to enter into an individual flexibility arrangements with your employees.
  • For employers who have employees on individual industrial agreements (eg AWAs and ITEAs) consider how you will engage new employees from 1 January 2010 onwards.

Swaab was recently named a 2009 Winner in the ALB Employer of Choice awards, and was winner 'Best Law Firm in Australia (Revenue < $20m)' and 'Attribute Award for Exceptional Service (Australia Wide)' in the 2008 BRW- Client Choice Awards.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.