The direction of the law covering rights, entitlements and obligations of employees in Victoria has been chang-ing. In the past, the AIRC made orders, called awards, which were binding only on the parties. WorkChoices legislation further narrowed their scope. The Fair Work regime gives minimum national standards and new modern awards with flexibility terms a central role in industrial relations, except for high-income workers.

FW Act and modern awards

Awards have a central role in the industrial relations system under the FW Act. An “award” is an enforceable document that provides a safety net of minimum terms and conditions of employment, along with the NES (seeNational Employment Standards”). In general, an award applies to employees in a particular industry or occupation. Awards are also used as a reference instrument to decide whether an agreement passes the “no disadvantage test” (used before 1 July 2009) and the “better off overall test” (used after 1 July 2009).

From 1 January 2010 new modern awards and the NES replaced the old awards. The old awards no longer apply to any employees or operate for any other reason under the FW Act, except as a historical reference or where expressly, or by deeming, they are to be incorporated into modern awards, the NES or enterprise agreements. Modern awards have reduced the overall number of awards by combining the coverage of a number of awards into one award.

Modern awards do not apply to employees on high incomes. The FW Act defines a high-income earner as an employee who has a written guaranteed income, accepted by the employee of greater value than the amount set by regulations. From 1 July 2019, the amount set by the regulations is $148 700 for full-time workers. Note that employees are not excluded solely because of the level of income; they must also have a written and accepted guarantee of a specified income to be excluded from award coverage (see ss 47(2), 329–333).

Ten minimum standards

Modern awards can contain 10 minimum standards in addition to the NES (s 139). These minimum standards are:

1 minimum wages, including skill-based classification;

2 type of employment;

3 arrangement of work, including hours, rosters, consultation regarding changes to rosters and breaks;

4 overtime rates of pay;

5 penalty rates, including for shift, weekend and public holiday;

6 annualised wage and salary arrangements;

7 allowances, including for expenses incurred, additional skills, responsibilities or disabilities;

8 leave, leave loading and arrangements for leave;

9 superannuation; and

10 procedures for consultation, representation and dispute settlement.

Flexibility terms

Modern awards must also include a flexibility term. Such a term helps an employer and employee to reach an arrangement to vary the effect of particular terms of an award to meet the genuine requirements of the parties. An employee must be better off overall on the flexibility arrangement than under the terms of the relevant award. The flexibility arrangement must be in writing and signed by each party.

Modern awards may also include terms relating to outworkers, industry specific redundancy schemes (e.g. the construction industry redundancy fund) and incidental and machinery terms (see ss 140–142 FW Act). Modern awards may also provide additional detail of the NES required for the specific industry.

As part of the award-modernisation task, the Australian Industrial Relations Commission (now called the Fair Work Commission (FWC)) created a default award, which applies to all non-managerial employees who are not covered by a modern award.

Determining whether a federal award applies, or which award applies, is not always easy. The best source of information for union members is their union, which will be familiar with the awards within its industry.

A breach of an award can lead to prosecution by authorities as well as to civil action.