Modern award compliance for employers

The Fair Work Ombudsman’s classification guidance suggests checking three things before you decide an award applies:

1. Read the coverage clause in full, including any exclusions.
2. Check that the employee’s duties fit within the award’s classification structure.
3. Consider whether another award could cover the employee.

The Ombudsman’s Pay and Conditions Tool and its list of awards help when coverage isn’t obvious. Awards don’t apply to high income employees: those who have accepted a written guarantee of annual earnings above the high income threshold, which is $190,100 from 1 July 2026.

Classification definitions describe duties, skills, qualifications, experience and supervision. A perfect fit isn’t required: the role as a whole should mostly match the level. Indicative tasks and job titles in awards are examples, not complete lists.

Review the classification when an employee:

• changes job or duties
• takes on more responsibility, such as supervising
• completes the maximum introductory period in their award
• completes relevant training or gains a new qualification.

The increase follows the Fair Work Commission’s Annual Wage Review 2026, as summarised in the Fair Work Ombudsman’s update. Two floors also apply:

• the lowest award rate for ongoing employment must be at least $1,004.90 a week or $26.44 an hour
• an entry-level rate for the first 6 months (or less) of employment must be at least $978.10 a week or $25.74 an hour.

The National Minimum Wage covers employees not covered by an award or registered agreement. Enterprise agreements are affected too, because an agreement’s base rate can’t be less than the base rate in the relevant award (see enterprise agreement vs award). The Commission reviews minimum wages every year, and changes usually start from the first full pay period on or after 1 July.

The base rate is only the starting point. Depending on the award, extra amounts can apply for:

• weekend, public holiday, evening or night work
• overtime beyond ordinary hours or outside the span of hours
• allowances for particular duties, skills, expenses or working conditions
• a casual loading, paid instead of entitlements casuals don’t get, such as paid annual leave.

Many awards use a 25% casual loading. The General Retail Industry Award, for example, requires a 25% loading on the minimum hourly rate for each hour worked. How loadings and penalty rates combine differs between awards, so read the relevant clauses rather than assuming one rule fits all. Pay slips must show loadings, allowances and penalty rates that can be separated from the ordinary rate.

The NES cover:

• maximum weekly hours and requests for flexible working arrangements
• casual employment and parental leave
• annual, personal/carer’s, compassionate, family and domestic violence, community service and long service leave
• public holidays and superannuation contributions
• notice of termination and redundancy pay.

Give every new employee the Fair Work Information Statement before, or as soon as possible after, they start. Casual employees also get the Casual Employment Information Statement, and employees on a new fixed-term contract get the Fixed Term Contract Information Statement.

For a criminal underpayment, a company faces a maximum fine of the higher of 3 times the underpayment or $9.1 million. An individual faces up to 10 years in prison, a fine of the higher of 3 times the underpayment or $1.82 million, or both. The Ombudsman can’t refer a small business employer for prosecution if it’s satisfied the employer complied with the Voluntary Small Business Wage Compliance Code.

Underpayments that aren’t criminal are dealt with as civil matters. Employers must back-pay the shortfall and can face court penalties of up to $21,840 per contravention for an individual and $546,000 for a company with 15 or more employees (or 3 times the underpayment, if higher). Serious contraventions attract penalties ten times higher.

1. Record each employee’s award and classification in their file.
2. Check every award rate, allowance and penalty in your payroll system after each annual wage review.
3. Compare a sample of pay slips with the Ombudsman’s Pay and Conditions Tool or the award’s pay guide.
4. Keep accurate time records so penalty rates and overtime can be checked.
5. Fix any underpayment promptly with back pay.