Modern awards are basically occupation-specific minimum pay rates and conditions of employment. When an employee is covered by the Fair Work Act 2009, modern awards supplement an employee’s baseline rights and entitlements as set out in the National Employment Standards.
The basics of modern awards
Modern awards tend to be discussed in the context of employee pay, perhaps because this is the issue that is most likely to result in a court case. However, modern awards can and frequently do cover a much wider range of employment-related issues.
For example, anything related to an employee’s time is likely to be covered by a modern award. This can include anything from minimum rest periods to minimum notice periods. Awards may also lay down a legal framework for employer / employee relations. For example, they may set out rules on consultation before workplace changes and mechanisms for dispute resolution.
In principle, the modern awards system should make life easier for everyone by avoiding the need to keep reinventing the wheel. In practice, however, the system can be massively complicated for employers to navigate. There are several reasons for this, but most hinge on the challenge of determining the right award for each employee.
It is therefore highly likely that the modern awards system will need to be reworked and simplified at some point in the near future. It is also likely that this review will result in increased penalties for employers who deliberately ignore the system (as opposed to being genuinely confused by it).
The history of the modern awards list
Australia spent most of the 19th century trying to figure out an effective way to resolve disputes between employers and employees. In the 1920s, it introduced the awards system as a relatively straightforward way of ensuring that employers treated their employees properly.
In simple terms, voters elected their governments (state and federal). These governments then set out minimum standards for the treatment of employees (“awards”). Employers were mandated to comply with them or face sanctions.
The development of the modern awards list
During the 1950s economic changes led to the awards system becoming both more complex and less relevant. The complexity was the result of greater demands being placed on the system. The lack of relevance was due to the fact the labour unions were growing more powerful and negotiating deals way ahead of the basic awards.
Matters came to a head in the 1970s when union pressure led to significant wage inflation. This became a serious problem for the Australian economy and hence for Australian society as a whole. In the early 1980s, therefore, the government worked with the unions to introduce the Prices and Incomes Accord.
Under the accord, unions agreed to lay off demands for wage increases provided that the government introduced social support and reduced inflation. The aim was that workers would be under less pressure to earn high wages as the cost of living would be lower and they would have a social safety net. This system worked well for about a decade. In the 1990s, however, unions, particularly stronger ones, began to feel that the accord was becoming a hindrance rather than a help. The government and unions, therefore, agreed to move from an awards-focused system to a system based on enterprise-level bargaining.
New awards for a new century
By the arrival of the 21st century, the awards system had become unfit for purpose. The complex federal system contained well over 1,000 awards. These were supplemented by a further several thousand state-level awards. This led to massive confusion, which was compounded by the development of new IT-based employment fields.
In 2004, the government attempted to address this with the WorkChoices legislation. This proved massively unpopular and was swiftly replaced by the Fair Work Act of 2009. As a result of this act, the thousands of previous awards were replaced by just 122 awards. These awards are now what is known as the modern awards list.