Which award applies

Awards are enforceable documents containing minimum terms and conditions of employment in addition to any legislated minimum terms. Awards provide pay rates and conditions of employment such as leave entitlements, overtime and shift work, amongst other workplace related conditions.

Most modern awards relate to particular industries or occupations. There are currently 121 modern awards of general application.

A small number of enterprise and State reference public sector modern awards cover specific employers and their employees only.

Before the better off overall test can be applied, it is necessary to correctly identify the modern award(s) that cover the employees and their employer(s) in relation to the work to be performed under the enterprise agreement.

If the Fair Work Commission applies the better off overall test by reference to the incorrect award, this may constitute an error providing the basis for an appeal.

While only 1 modern award can cover an employee in relation to particular employment, when all of the employees employed in an enterprise and covered by an enterprise agreement are considered, there may be more than 1 relevant award.

The employer is required to identify the relevant modern award(s) for comparison when completing Form F17 – Employer’s declaration in support of an application for approval of an enterprise agreement, which accompanies the agreement upon lodgment.

Related information

• Declaration from employer

Modern awards contain interaction rules which govern situations where more than one award may appear to cover an employee. Coverage in most modern awards is defined according to industry however some modern awards apply on an occupational basis. The relevant modern award can be determined by considering the industry of the employer and comparing the duties performed by the employees to the classification definitions in the modern award.

The Commission is then required to consider the coverage of the relevant award at the test time and compare the terms of the agreement to the terms of the relevant award covering the employees at that time.[3]

To determine the award that covers an employee it may be necessary to examine the major, substantial or principal aspect of the work performed by the employee at test time, including the amount of time spent performing particular tasks, the circumstances of the employment and what the employee was employed to do. The question is one of fact to be determined by reference to the duties actually attaching to the position, rather than its title.[4]

Related information

• What if employees are award free?

Appropriate award identified

Appropriate award identified

Australian Workers' Union v Coffey Information Pty Ltd [2013] FWCFB 2894 (Watson VP, Sams DP, Roberts C, 24 May 2013), [(2013) 232 IR 266].

The Commission, in a decision at first instance, approved the Coffey Materials Testing Services Agreement 2012-2016. The AWU sought permission to appeal on the basis that the award used for purposes of the BOOT was not the relevant award. The Commission had used the Manufacturing and Associated Industries and Occupations Award 2010.

The approximately 330 employees to be covered by the agreement were engaged in the role of 'Testing Technician' and primarily performed geotechnical testing and analysis either at the employer's permanent laboratories or at temporary laboratories established at client sites. The AWU contended that the relevant award for the BOOT was the Building and Construction General On-site Award 2010.

Permission to appeal was granted. However, the appeal was dismissed.

When determining the correct award, the Full Bench considered the type of work performed by the employees and determined that the work fell within the classifications in the Manufacturing and Associated Industries and Occupations Award 2010. The Full Bench considered that the interaction between the two awards and determined that in their view, the provisions of the award established a priority in favour of the Manufacturing and Associated Industries and Occupations Award 2010 covering the employees, and that it was the more appropriate award.

Appropriate award NOT identified

Applicant contended employees were award free

Re G.J.E. Pty Ltd [2013] FWCFB 1705 (Acton SDP, Smith DP, Ryan C, 3 April 2013).

An application was lodged for the approval of the All Equipment Hire Enterprise Agreement 2012. The employer conducted a general equipment hire business in South Australia at which the employees performed a customer service function and incidental duties (including cleaning, administration and basic equipment maintenance). Equipment was hired to both trade and personal customers.

The employer statutory declaration filed with the application contended the employees were award free.

The Commission did not agree that the employees were award free. The Commission found that the relevant award for the purpose of the BOOT was the General Retail Award 2010 (Retail Award). By reference to the Retail Award, the Commission could not be satisfied that the agreement passed the BOOT and declined to approve the agreement.

The employer appealed the decision and submitted that the Commission made an error in concluding that the Retail Award was the relevant modern award.

The evidence before the Full Bench was that approximately 30% of the employer's revenue was derived from the hire of equipment to non-trade (and presumed domestic) customers. The Full Bench was satisfied that this was sufficient to meet the coverage definition set out in the Retail Award.

The Full Bench agreed with the Commission's finding that the agreement, based on the Retail Award, did not pass the BOOT and confirmed the Commission's decision not to approve the agreement.

Where employees are covered by a transitional instrument which continues to operate, the better off overall test is applied by reference to the enterprise instrument or transitional award, rather than a modern award.[5]

Related information

• Public interest test

Non-modernised award identified

Enterprise award applies

Re Warner World Australia Pty Ltd and Village Theme Park Management Pty Ltd T/A Village Roadshow Theme Parks [2010] FWAA 5329 (Harrison SDP, 19 July 2010).

An application was made for approval of an enterprise agreement known as the Village Roadshow Theme Parks – MEAA Entertainers Agreement 2010.

The Commission was satisfied that each of the requirements of ss.186, 187 and 188 of the Fair Work Act as relevant to this application for approval had been met. The Warner Bros Movie World – M.E.A.A. Entertainers Award 2001 [AP802563] was the relevant award for the application of the BOOT. This was an enterprise award and it contained a multi-hiring clause and banking of hours in similar terms to the enterprise agreement.

The Commission found that the better off overall test was satisfied. The agreement was approved with undertakings.

Division 2B award applies

Re MTC Trading Pty Ltd T/A Michel's Patisserie Golden Grove [2010] FWAA 8012 (Hampton C, 15 October 2010).

An application was made for approval of an enterprise agreement known as the MTC Trading PL and Staff Enterprise Agreement 2010.

The Commission applied the terms of the Delicatessens, Canteens, Unlicensed Cafes and Restaurants etc Award (the Delicatessens Award) for the purposes of the BOOT. The Delicatessens Award was a Division 2B Award and was applicable for this purpose as a result of a transfer of business to the employer, and the operation of s.312 of the Fair Work Act and the Transitional Act.

Multiple modern awards may need to be used to apply the better off overall test where different awards apply to different classes of employees to be covered by the enterprise agreement. The awards identified as relevant would be those that would cover the employer(s) and the employees in relation to the work to be performed under the agreement.

Multiple modern awards identified

Multiple modern awards identified

ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) [2012] FWA 161 (McKenna C, 19 March 2012).

ALDI Foods Pty Ltd v Transport Workers' Union of Australia; National Union of Workers, NSW Branch [2012] FWAFB 9398 (Boulton J, O’Callaghan SDP, Riordan C, 1 November 2012), [(2012) 227 IR 120].

An application was made for the approval of 3 single-enterprise agreements, the Derrimut Agreement 2012, the Stapylton Agreement 2012 and the Minchinbury Agreement 2012. The TWU and NUW NSW raised objections.

The agreements concerned the pay and conditions for employees working in and from three of Aldi's distribution centres. The 3 agreements had broadly similar, but not identical, provisions. For example, there are different rates of pay in the agreements and other points of distinction.

In considering whether the agreements passed the BOOT, the Commission was required to consider the General Retail Industry Award 2010, the Storage Services and Wholesale Award 2010, the Road Transport and Distribution Award 2010, the Manufacturing & Associated Industries and Occupations Award 2010 and the Miscellaneous Award 2010.

The Commission found, for various reasons, that the agreements did not meet the requirements for approval, and undertakings offered by the employer did not address the concerns of the Commission. The applications were dismissed.

On appeal, the Full Bench confirmed the decision not to approve the agreements.