Modern Award Mistakes: Why Knowing Your Award Is Crucial
Most business owners know that modern awards set minimum pay rates and employment conditions.
But what many don't realise is just how detailed, and sometimes surprisingly specific, those rules can be.
When we review employment arrangements for our clients, we regularly come across issues that business owners had absolutely no idea existed.
And we're not just talking about getting the hourly rate wrong.
We're talking about rules around public holidays, rostering, redundancy, allowances and working hours that can be buried several pages into an award. Rules that can easily be overlooked, even by someone who has been running a business for years.
To give you an idea of what we mean, here are six examples that might surprise you.
1. Your employee doesn't work on a public holiday, but you might still owe them an extra day's pay
Under the Restaurant Industry Award, if a full-time employee's rostered day off falls on a public holiday, the employer must provide one of three things: an extra day's pay, another day off within 28 days, or an additional day's annual leave.
So, imagine your restaurant is closed on Mondays, and that's your full-time chef's regular rostered day off. A public holiday falls on that Monday.
You might assume that because the chef wasn't going to work anyway, nothing changes.
But the award says otherwise.
And this is exactly the sort of detail that can easily be missed when setting up payroll.
2. Redundancy doesn't always mean what you think it means
Most business owners associate redundancy with a position no longer being required.
But under the Building and Construction General On-site Award, there's an industry-specific redundancy scheme with a much broader definition.
Under this scheme, an employee ceasing employment can trigger redundancy entitlements even when their position hasn't been made redundant in the traditional sense. There are exceptions, including misconduct and refusal of duty.
The award also has its own redundancy payment calculations, including potential entitlements for employees with less than 12 months' service.
Imagine a construction business owner assuming that because an employee has only worked for eight months, no redundancy payment applies.
That assumption could be costly.
3. You can't necessarily roster a 12-hour day, even if your employees are happy to work it
Under the Wine Industry Award, ordinary hours generally cannot exceed 10 hours per day.
That limit can be extended to 12 hours, but it requires agreement between the employer and the majority of employees in the relevant workplace or section.
So, imagine a vineyard organising longer days during a particularly busy period. Everyone is happy with the arrangement, and the business assumes that's enough.
But unless the relevant agreement requirements are met, those additional hours may need to be treated differently for pay purposes.
It's a good example of how employee agreement and award compliance aren't always the same thing.
4. Bad weather can change the minimum amount you need to pay a casual employee
Here's another interesting one from the Wine Industry Award.
Casual employees generally have a minimum engagement of four hours per shift.
But there's a specific exception for casual employees performing pruning or harvesting work who are affected by unexpected weather. In those circumstances, the minimum payment can be reduced to two hours.
Imagine you've organised a team to harvest grapes, but unexpected rain means work needs to stop after an hour.
Whether you're required to pay two or four hours can depend on the type of work the employees were engaged to perform and why the shift ended.
It's a very specific distinction, and one you could easily miss without reading the award carefully.
5. Changing an employee's roster might require more notice than you realise
Under the Legal Services Award, where fortnightly rosters apply, employees must generally receive 14 days' notice of each roster.
There are provisions allowing changes to meet specific operational requirements, but these involve consultation and giving as much notice as possible.
Imagine a small legal practice changing an employee's roster with only a few days' notice because another team member is away.
From the business owner's perspective, it's simply a practical adjustment to keep the office running.
But the award has specific rules about how those changes are managed.
And while the employee might be perfectly happy to help, it's still important to understand exactly what the award requires.
6. An employee can work fewer than 38 hours and still be entitled to overtime
This is one we see business owners misunderstand quite regularly.
Under the Manufacturing and Associated Industries and Occupations Award, the ordinary span of hours for day workers is generally 6 am to 6 pm, with provisions allowing that span to be moved by agreement.
Work performed outside the applicable span attracts overtime rates.
So, imagine an employee working from 5 am to 1 pm, Monday to Friday.
They're working under 38 hours a week (after the lunch break), but even if they worked only 35 hours, the time before 6 am could still attract overtime unless the span had been validly adjusted.
It's a reminder that overtime isn't always about how many hours someone works. Sometimes it's about when they work them.
So, how confident are you that you're interpreting your modern award correctly?
These are just 6 examples, and there are plenty more.
Modern awards can contain dozens of pages of provisions, exceptions, definitions and conditions. Some rules apply to all employees, others only to certain classifications, employment types or circumstances.
Most of the mistakes we uncover aren't deliberate. Business owners are often doing what they believe is right, based on how things have always been done.
But that's where problems can develop.
An overlooked allowance, an incorrect classification or a misunderstood rostering rule might seem minor at first. Over time, however, those mistakes can lead to underpayments, backpay obligations and unnecessary disputes.
And paying your employees above the award minimum doesn't automatically protect you from these issues.
Our advice is simple: Don't just check the pay rates. Make sure you understand the award that sits behind them.
Would you be interested in learning how to read a modern award?
We're considering running practical workshops for business owners on "How to Read a Modern Award", either face-to-face or via video.
The idea is to take the mystery out of modern awards and show you how to find, read and interpret the provisions that matter to your business.
No lengthy legal presentations. Just practical guidance, real examples and the opportunity to ask questions.
We're currently gauging interest before confirming dates and locations.
Interested? Register your interest using the link below.
There's no commitment at this stage, and those who register first will have access to an early bird discount when bookings open.
Book a free discovery call today. Let’s make HR the least of your worries.
Need help? Contact us today - sandra@hrconsultingtas.com.au or 0408 408 225
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The content provided on this website serves as a general information resource on the subjects discussed, and should not be considered tailored to specific individual circumstances or a replacement for legal counsel. While we exert significant effort to ensure the accuracy of our information, HR Consulting TAS cannot ensure that all content on this website is consistently accurate, exhaustive, or current. Recommendations by HR Consulting TAS and any information acquired from this website should not be regarded as legal advice.
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