If you employ staff (or you’re about to), you’ve probably heard someone say: “Make sure you’re paying under the right Award.”
That advice is spot on - but for many small business owners, it raises two immediate questions:
- How many modern awards are there in Australia?
- Which one applies to my business and my employees?
Note: This article is general information for Australian businesses and isn’t legal advice. Award coverage and pay rules can be technical and fact-specific, so it’s worth getting tailored advice if you’re unsure.
Modern Awards are one of the most common “hidden” compliance risks for Australian small businesses. They set minimum rules for pay rates, penalty rates, allowances, overtime, breaks, and rostering for many employees.
And the tricky part is that Awards don’t just apply based on what your business “calls itself”. They can apply based on what you actually do day-to-day, and also on what individual employees do in their roles.
Below, we’ll break down how many Modern Awards exist, how Award coverage works, and a practical way to work out which Modern Award applies to your small business (and what to do if you’re not sure).
What Are Modern Awards (And Why Do They Matter For Small Businesses)?
A Modern Award is a legal instrument made by the Fair Work Commission that sets minimum employment conditions for a particular industry or occupation.
Modern Awards matter because they often determine your minimum legal obligations for things like:
- minimum hourly rates and classifications
- penalty rates (weekends, public holidays, late nights)
- overtime rules
- allowances (e.g. uniforms, tools, travel)
- breaks and spread of hours
- rostering and consultation requirements
- leave loading and some additional entitlements
Modern Awards sit “under” your employment contracts. That means you can offer employees more than the Award (for example, higher pay or better leave), but you generally can’t offer less than the applicable minimums.
If you’re unsure whether your team is covered by an Award, it’s worth getting this clarified early. Underpayment issues can snowball over time, especially if you’ve got multiple staff, multiple roles, or weekend trading.
If you’d like a structured approach, this is the kind of issue we help small businesses with through award compliance.
How Many Modern Awards Are There In Australia?
So, how many modern awards are there?
There are currently around 120+ Modern Awards operating in Australia. The exact number can change over time due to updates, consolidations, new instruments, or variations made by the Fair Work Commission.
This is why Award compliance can feel overwhelming for small business owners - there isn’t one “master” Award, and coverage can vary by:
- industry (e.g. retail, hospitality, building and construction)
- occupation (e.g. clerks/administration, labour hire, professional roles)
- type of work performed (what the employee actually does)
Modern Awards vs The National Employment Standards (NES)
It also helps to know what Awards are not.
The National Employment Standards (NES) are the baseline minimum entitlements for most employees in Australia (things like annual leave, personal leave, parental leave, and notice of termination).
Modern Awards usually add industry/role-specific minimums on top of the NES.
Are All Employees Covered By A Modern Award?
No. Some employees are:
- award-covered (a Modern Award applies)
- award-free (no Modern Award applies, but the NES still applies)
- enterprise agreement-covered (an enterprise agreement applies instead of a Modern Award, with the NES still applying)
It’s also worth noting that some higher-level or specialist roles can be award-free depending on the circumstances (for example, where the role isn’t covered by an industry or occupation Award, or where an applicable Award specifically excludes certain employees). For small businesses, though, the most common situation is Award coverage - and that’s where choosing the correct Modern Award becomes crucial.
Which Modern Award Applies To Your Small Business?
The key idea to remember is this: Award coverage is not always “one business = one Award”.
Your business might mainly operate under one industry Award, but you may also employ people whose roles are more closely connected to a different occupation-based Award.
Here’s a practical step-by-step approach many small business owners use.
1) Start With What Your Business Actually Does
Awards often look at the principal purpose and the main activities of the business - not just your registered business name or your marketing tagline.
Ask yourself:
- What is the primary product/service you sell?
- What is the main way you generate revenue?
- What do your staff spend most of their time doing?
For example, a business selling packaged food might still be “retail” in practice if it runs like a shopfront selling to the public - but could look different if it’s primarily manufacturing or wholesaling.
2) Identify The Employee’s Actual Role (Not Just Their Job Title)
Modern Awards apply based on the work an employee performs. A job title like “Operations Assistant” or “All-Rounder” doesn’t automatically tell you the right Award.
Instead, look at:
- their core duties (day-to-day tasks)
- their level of responsibility or supervision
- whether they manage staff or budgets
- the skills/qualifications needed
This is also where correct classification matters. Even within the same Modern Award, different classifications can have very different minimum rates and entitlements.
3) Check The Award’s “Coverage” Clause
Each Modern Award has a coverage section (often early in the document) explaining who it applies to.
When you read the coverage clause, you’re typically looking for:
- whether your business falls within the defined industry or occupations
- whether the employee’s role falls within the definitions
- any explicit exclusions (some Awards exclude certain types of employees or businesses)
If you’re doing this internally, keep notes on why you think a particular Award applies - that reasoning can be useful later if you need to show how you reached your decision.
4) Confirm Pay Rates, Penalties, Allowances, And Hours Rules
Once you’ve identified the likely Award, don’t stop at the title. The risk for small businesses often shows up in the “operational” parts of the Award, like:
- minimum ordinary hourly rate for the relevant classification
- when overtime applies and how it’s calculated
- penalty rates for weekends/public holidays
- split shift rules (if relevant)
- minimum engagement periods (particularly for casual employees)
- allowances (uniform, travel, meals, tools)
This is often where a business can be “mostly right” but still end up with underpayments - especially with weekend trading, late-night shifts, or employees doing mixed duties.
5) Put The Outcome Into Writing (So It’s Consistent)
Once you’ve identified the likely Modern Award and classification, it’s worth reflecting it clearly in your employment documentation so that everyone is aligned from the start.
For many businesses, that means having a well-drafted Employment Contract and clear payroll/rostering processes that match the Award’s requirements.
If you have multiple staff and you want consistency across the team, a staff handbook package can also help document internal policies (like attendance, conduct, and workplace procedures) alongside your Award obligations.
Common Modern Award Traps (And What To Do If More Than One Could Apply)
A very common issue for small businesses is thinking Awards operate like a “pick one” system. In reality, you may need to apply different rules to different employees depending on what they do.
Here are some common traps we see.
Trap 1: Assuming The Same Award Covers Every Role In Your Business
Many small businesses have a mix of roles, for example:
- frontline customer service staff
- administration/accounts staff
- delivery drivers
- technicians or tradespeople
- managers
Some of these roles may fall under different Award coverage depending on your industry and the nature of the work.
Trap 2: Calling Someone “Salaried” And Assuming Awards Don’t Apply
Paying a salary does not automatically make an employee award-free.
If an Award applies, you still need to ensure the employee receives at least what they would be entitled to under the Award for the hours they work. Depending on the Award and the way the arrangement is set up, this may involve specific rules around annualised wages or salary arrangements (and in some cases, record-keeping and reconciliation requirements).
This is why salary arrangements should be structured carefully, particularly for businesses with irregular hours, weekend work, or seasonal peaks.
Trap 3: Using Contractors When They’re Functionally Employees
This isn’t strictly an “Award selection” problem, but it’s connected.
If someone is actually an employee (even if you’ve called them a contractor), Award obligations may apply - along with superannuation, leave, and termination rules.
If you’re engaging contractors, it’s worth setting up the arrangement properly from the start so your classification and pay obligations match the working reality.
Trap 4: Not Updating When The Business Changes
Award coverage can become more complicated as your business grows. For example:
- you expand into a new product or service line
- you open another location with different trading hours
- you bring on supervisors/managers
- you start running events, installations, or delivery services
Even if you got it right at the beginning, it’s wise to revisit Award compliance when your operations change.
How Modern Awards Work With Contracts, Policies, And Other Employment Rules
Once you’ve answered “how many modern awards are there” and identified the one that likely applies, the next step is making sure your day-to-day employment practices line up with it.
Modern Awards Set Minimums - Your Contracts Should Match (Or Improve On) Them
A well-drafted employment contract should:
- clearly identify whether a Modern Award applies
- set out pay arrangements clearly (hourly vs salary, penalties, overtime approach)
- deal with confidentiality, intellectual property, and post-employment restraints (where appropriate)
- reduce ambiguity around duties and performance expectations
This is especially important where you want to pay above the Award or simplify pay arrangements (for example, through an annualised salary arrangement where legally appropriate and properly documented).
Workplace Policies Support Compliance (And Make Expectations Clear)
Modern Awards often interact with your operational decisions - rosters, breaks, shift changes, and behavioural expectations.
Clear written policies can help your team understand what’s expected and help you apply rules consistently across the business. Depending on your workplace, this may include a workplace policy set covering things like leave requests, performance management, bullying and harassment, and workplace conduct.
What If You’re Still Not Sure Which Award Applies?
If you’re stuck between two Awards (or you suspect different Awards apply to different employees), it’s a good time to get tailored advice.
The cost of sorting this out early is usually far less than the cost of untangling it later - especially if you need to back-pay entitlements or respond to a complaint.
Many small business owners choose to speak to an employment lawyer when:
- their business sits across more than one industry (e.g. retail + warehousing)
- they have employees doing mixed duties (e.g. sales + admin + delivery)
- they want to put staff on salaries and need confidence the salary is structured to comply with Award minimums (including penalties and overtime where relevant)
- they’re onboarding their first employees and want to set things up correctly
You can also read about Modern Awards generally in our overview of modern awards and how they operate in practice.
Key Takeaways
- There are around 120+ Modern Awards in Australia, so it’s normal for small business owners to feel unsure about which one applies.
- A Modern Award can apply based on your industry, your employee’s occupation, and the work actually performed - not just job titles or business branding.
- Getting the correct Award is only step one; you also need to apply the correct classification, pay rates, penalty rates, allowances, overtime, and rostering rules.
- Some businesses will have different Awards for different roles, especially where teams include admin, delivery, trades, or operational staff.
- A clear Employment Contract and well-set workplace policies help you apply Award obligations consistently and reduce misunderstandings.
- If you’re unsure, it’s worth getting advice early - Award compliance issues can grow quickly and become costly to fix later.
If you’d like help working out which Modern Award applies to your small business (and setting up your contracts and policies properly), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
