Classifications under a modern award
If applicable, once you have identified the modern award that applies to your business, the next steps are to determine:
Which of your employees are covered by the award
What classification applies to each of your employees covered by the award
Identifying the appropriate classification for each of your employees covered by a modern award is essential for ensuring that you are paying them the correct rate of pay. Significant underpayments can occur if an employee is not assigned a classification or is incorrectly classified.
There are also penalties applicable under many modern awards if an employer fails to assign an employee covered by the modern award with a classification.
What is a classification?
An employee’s classification is effectively their job. An employee’s job is the collection of duties that they perform.
Is my employee covered by the modern award that covers my business?
An employee will be covered by a modern award if their job is included within the classifications that the modern award covers. Usually a modern award will not apply to an employee if their job does not appear in the award’s classifications.
Example - Industry award
There is a two-step process to determine whether a modern award applies to a particular employee of a business. For example, under the Fast Food Industry Award 2010:
Where do I find the modern award classifications?
Since an employee’s classification determines what an employee is entitled to be paid, the easiest way to find the applicable classification is in the “minimum wages” clause of most modern awards, as this will explain what each classification is to be paid.
Example - Industry award
Clause 17 (“Minimum weekly wages”) of the Fast Food Industry Award 2010 (accurate as of 1 July 2021) specifies minimum wages for the following classifications:
Each of these is a “classification”, so you need to determine which classification applies to each of your employees.
In this example, the employee’s classification is Level 1, 2, 3 etc., even though their job title will be something else.
How do I identify an employee's classification?
A modern award will typically define at least some, if not all, of the classifications so that employers can identify which employees fall within it.
This is usually found in a “Schedule” titled “Classifications” at the end of the award.
Sometimes a modern award will only define some classifications, in which case you may have to consider the “ordinary meaning” of the words in the classification or whether the role title has any particular meaning that has developed over time. If this occurs, you should contact the Fair Work Ombudsman or obtain legal advice rather than trying to guess the correct classification on your own.
What happens if someone falls within more than one classification?
It is not uncommon for an employee to perform tasks which fall under two or more classifications; for example, a waiter who also acts as a cashier.
In this circumstance, the question to be answered is: what is the primary purpose of their employment?
Generally, the “primary purpose” of a person’s employment is determined by what they spend most of their time doing. A waiter who spends 90% of their time performing the duties of a waiter, and 10% of their time performing the duties of a cashier, will generally be classified as a waiter.
However, where the employee’s duties are nearer a 50-50 distribution between classifications, it can become harder to categorise them into a specific classification. In such cases, you should contact the Fair Work Ombudsman or obtain legal advice.
What if an employee temporarily performs duties at a higher classification?
Many modern awards allow for employees to be paid the rate of the higher classification when they perform the duties of that role, often called a “higher duties allowance” or a “higher duties rate”. It is important to pay attention to the terms of the particular award to see if this applies and how it works.
Can an employee’s classification change?
Yes. An employee’s classification can change either deliberately (e.g., by a promotion) or by practice.
An employee’s classification may change “by practice” if they spend the majority of the time performing duties other than in their usual role.
What if an employee does not fall within a classification?
If an employee does not fall within the classification of a particular modern award, one of two things can happen:
- they could be covered by another modern award (such as an occupational award); or
- they could be award/agreement free.
You can compare the differences below.
