Which Modern Award Applies to My Employee?

Short answer: The Modern Award that applies to your employee depends on two things — the industry your business operates in, and the specific job your employee does. You work this out by checking the “coverage clause” (usually clause 4) of the award that matches your industry, then confirming the employee’s duties fit one of that award’s job classifications. If no award covers the industry or the role, the employee is likely “award-free” and is instead protected by the National Minimum Wage and the National Employment Standards (NES) [1][6].

For most Australian small businesses, this isn’t a one-off exercise. New hires, changing job duties, and annual wage increases all mean award coverage should be checked regularly — not assumed.

What Is a Modern Award, and Why Does It Matter?

A Modern Award is a legally binding document made by the Fair Work Commission that sets minimum pay rates and employment conditions for a defined industry or occupation [2]. There are currently more than 120 Modern Awards in operation across the Australian workplace relations system, covering everything from clerical work to hospitality, manufacturing, healthcare and beyond [3].

Awards operate under the Fair Work Act 2009 (Cth), alongside the National Employment Standards (NES) — 11 minimum entitlements that apply to virtually all national system employees regardless of which award (if any) covers them [4]. Together, the Fair Work Act, the NES and the relevant Modern Award form the minimum floor of pay and conditions for an employee. An employment contract can offer more than the award provides, but it can never offer less [5].

Getting award coverage wrong is not a minor administrative slip. Underpayment resulting from misapplied or missed award coverage is one of the most common — and most costly — compliance failures for Australian SMEs, and it sits at the heart of ongoing HR compliance obligations for any business that employs staff.

How to Work Out Which Award Applies

The Fair Work Ombudsman recommends a structured, two-step process for every employee [6][7]:

Step 1: Identify the award(s) that could cover your industry

Start with your business’s core activity. The Fair Work Ombudsman’s Find My Award tool (available at fairwork.gov.au) lets you search by industry or job title to shortlist likely awards [7]. It’s common for more than one award to look like a possible fit — for example, a business that serves food could potentially sit under the Hospitality Award, the Restaurant Industry Award, or the Fast Food Industry Award, depending on exactly how the food is prepared, served and consumed [6].

Step 2: Read the coverage clause and check the job classifications

Every award has a coverage clause, usually clause 4, setting out which employers and employees it applies to, along with specific exclusions [8]. If your business fits the coverage clause, the next step is to check the classification structure (usually contained in the pay section or a schedule at the end of the award) to confirm the employee’s actual duties — not just their job title — match one of the listed classifications [8][6].

This second step trips up a lot of employers. A job title like “Office Manager” or “Coordinator” tells you very little; the award classification is based on the tasks the person actually performs day to day.

Special cases: managers, professionals and high income employees

Some awards specifically exclude certain roles even where the employer’s industry is otherwise covered. The Miscellaneous Award, for example, does not cover managerial employees or professional employees such as accountants, finance, marketing, legal, human resources, public relations or IT specialists [9]. Many other awards use similar exclusions for genuinely senior or specialist roles.

Separately, an employee can be taken outside award coverage through a guarantee of annual earnings. If an employer gives a written guarantee that an employee will earn more than the high income threshold, the award that would otherwise apply stops applying for that guaranteed period [10]. The high income threshold is indexed annually — from 1 July 2026, it is $190,100 [10][11]. This mechanism doesn’t remove the NES, and it doesn’t apply automatically just because someone is paid well; it requires a specific written guarantee that meets the Fair Work Act’s requirements.

What If No Award Applies?

If, after working through the process above, no Modern Award covers the industry or the role, the employee is award and agreement free. They must still be paid at least the National Minimum Wage, and they still receive the full protection of the NES [4][12].

Following the Fair Work Commission’s 2026 Annual Wage Review, the National Minimum Wage and minimum award rates increased by 4.75% from the first full pay period on or after 1 July 2026. For award and agreement-free employees, this puts the National Minimum Wage at $26.44 per hour ($1,004.90 per week, based on a 38-hour week), and the casual rate (including the 25% casual loading) at $33.05 per hour [12]. These figures change every year, so they should always be checked against the current Fair Work Ombudsman rates before being applied.

Practical SME Examples

Example 1 — The café that isn’t sure if it’s “hospitality” A small café owner assumes the Hospitality Industry (General) Award applies because they serve coffee and food. On checking the coverage clauses more closely, they find the definition of “restaurant industry” in the Restaurant Industry Award specifically includes cafés, and because most of their trade is sit-down dining rather than takeaway, the Restaurant Industry Award — not the Hospitality Award or the Fast Food Award — is the correct fit [6]. Getting this wrong would mean using the wrong pay rates, penalty rates and classification structure for every staff member.

Example 2 — The bookkeeper hired into a trades business A small plumbing business takes on an office-based bookkeeper to handle invoicing and payroll. Because the core business is trade services, it’s tempting to assume the same award (or no award at all) applies to everyone. In practice, administrative and clerical staff are commonly covered by the Clerks — Private Sector Award, a separate award from whatever covers the tradespeople on the tools [6]. Each role in a business can sit under a different award.

Common Mistakes SMEs Make

• Assuming a job title tells you the classification. Coverage is based on the duties actually performed, not the title on the business card.
• Applying one award to the whole business. Different roles in the same business (for example, admin staff versus tradespeople, or kitchen staff versus front-of-house) can sit under entirely different awards.
• Treating “high income” as automatically award-free. Without a valid written guarantee of annual earnings above the threshold, a high-earning employee may still be covered by an award [10].
• Not rechecking coverage when a role changes. A promotion, a change in duties, or a shift from casual to permanent can move an employee into a different classification — or a different award entirely.
• Ignoring annual wage increases. Award rates and the National Minimum Wage are reviewed and typically increased every 1 July following the Fair Work Commission’s Annual Wage Review [12]. Using last year’s rates is a common and avoidable underpayment risk.
• Assuming an enterprise agreement automatically means no award applies. This depends entirely on what the agreement actually covers — it needs to be checked against the same classification logic.

Quick Checklist: Confirming Award Coverage for a New or Existing Employee

[ ] Identify your business’s core industry and activities

[ ] Use the Fair Work Ombudsman’s Find My Award tool to shortlist possible awards

[ ] Read the coverage clause (usually clause 4) of each shortlisted award

[ ] Check for specific exclusions (e.g. managerial, professional, or specialist roles)

[ ] Match the employee’s actual day-to-day duties to the award’s classification structure

[ ] Confirm the correct classification level and corresponding pay rate

[ ] If no award applies, confirm at least the National Minimum Wage and full NES entitlements are provided

[ ] If considering a guarantee of annual earnings, confirm it is in writing and exceeds the current high income threshold

[ ] Record the outcome in the employment contract and payroll system

[ ] Diarise a review at each 1 July Annual Wage Review, and whenever a role or duties change

Related Reading in the HR Knowledge Centre

• Understanding the National Employment Standards: A Plain-English Guide for Employers
• How to Correctly Classify Employees Under a Modern Award
• What the Annual Wage Review Means for Your Business Each 1 July

How HR Excellence Partners Supports SMEs

Award coverage sits at the foundation of good HR compliance — get it wrong and it flows through to every pay run, every contract, and every future dispute. For SME owners without an internal HR team, working through coverage clauses, classification structures and annual wage movements on top of running the business is genuinely difficult to do alone, and the cost of getting it wrong (backpay, penalties, and Fair Work Ombudsman scrutiny) is real.

HR Excellence Partners helps Australian SMEs confirm correct award coverage and classification for every employee, build compliant contracts and pay structures around it, and keep that position current as your team and the law change. If you’re not confident every employee in your business is on the right award and the right pay rate, an HR Health Check is the fastest way to find out.

Book your HR Health Check today. Use code HEPFREE at checkout to have the cost of your HR Health Check waived.

Vas Papadopoulos
Founder & Principal HR Consultant
HR Excellence Partners
vas@hrexcellencepartners.com.au
hrexcellencepartners.com.au
+61 432 244 744

References

1. Fair Work Ombudsman, “I’m not sure which award covers my business” — https://www.fairwork.gov.au/workplace-problems/common-workplace-problems/im-not-sure-which-award-covers-my-business
2. Fair Work Ombudsman, “Modern awards fact sheet” — https://www.fairwork.gov.au/tools-and-resources/fact-sheets/minimum-workplace-entitlements/modern-awards
3. Fair Work Ombudsman, “List of awards” — https://www.fairwork.gov.au/employment-conditions/awards/list-of-awards
4. Fair Work Ombudsman, “National Employment Standards” — https://www.fairwork.gov.au/employment-conditions/national-employment-standards
5. Fair Work Ombudsman, “About awards” — https://www.fairwork.gov.au/employment-conditions/awards/about-awards
6. Fair Work Ombudsman, “I’m not sure which award covers my business” — https://www.fairwork.gov.au/workplace-problems/common-workplace-problems/im-not-sure-which-award-covers-my-business
7. Fair Work Ombudsman, “Awards” — https://www.fairwork.gov.au/employment-conditions/awards
8. Fair Work Ombudsman, “List of awards” — https://www.fairwork.gov.au/employment-conditions/awards/list-of-awards
9. Fair Work Ombudsman, “Miscellaneous Award 2020 [MA000104]” — https://awards.fairwork.gov.au/MA000104.html
10. Fair Work Ombudsman, “Award and agreement free wages and conditions” — https://www.fairwork.gov.au/employment-conditions/awards/award-and-agreement-free-wages-and-conditions
11. Fair Work Ombudsman, “Annual Wage Review” — https://www.fairwork.gov.au/about-us/workplace-laws/annual-wage-review
12. Fair Work Ombudsman, National Minimum Wage and Annual Wage Review 2026 increase (effective from the first full pay period on or after 1 July 2026) — https://www.fairwork.gov.au/about-us/workplace-laws/annual-wage-review

This article is general information only and does not constitute legal advice. Award coverage depends on the specific facts of each business and role — where there is any doubt, seek advice from the Fair Work Ombudsman (13 13 94) or a qualified workplace relations professional.