The system of ‘modern awards’ operating under Pt 2-3 of the Fair Work Act 2009 (Cth) (FW Act) — along with the National Employment Standards in Pt 2-2 forms the ‘safety net’ of minimum employment conditions for employees covered by the FW Act.

There are some 122 modern awards presently in operation, applying mainly in respect of particular industries and (in some instances) specific occupational groupings. These awards were the product of the ‘award modernisation’ process carried out by the Australian Industrial Relations Commission in 2008–2009. The new modern awards replaced more than 1,500 federal and state awards. The modern awards took effect on 1 January 2010, and are now overseen by the Fair Work Commission (FWC).

A small number of employers and their employees are covered by enterprise awards and state reference public sector awards. Such instruments are dealt with in the Miscellaneous issues subtopic.

Sections 47 and 48 of the FW Act deal with the circumstances in which modern awards cover, and apply to, employers, employees and other parties (eg unions) — with differing consequences attaching to the concepts of award coverage and application. Section 143 contains further provisions relating to coverage clauses in modern awards.

See Coverage clauses.

Part 2-9 Division 3 of the FW Act contains provisions for the exclusion (from the application of modern awards) of employees who are subject to a ‘guarantee of annual earnings’ provided by their employer. Such a guarantee can only be made in respect of an employee who earns more than the ‘high income threshold’ (currently $145,400 per annum for a full-time employee). Detailed provisions set out how employees’ earnings are to be calculated for these purposes, and the requirements for and consequences of entering into a guarantee of annual earnings.

See High income employees.

Section 144 of the FW Act requires all modern awards to include a ‘flexibility term’ enabling employers and individual employees to enter into ‘individual flexibility agreements’ (IFAs). The effect of an IFA is to vary award terms in order to meet the genuine needs of the employer and employee concerned. A standard or model flexibility clause has been adopted in all modern awards. Certain safeguards of employees’ interests apply in relation to the making of IFAs under award flexibility clauses.

See Individual flexibility arrangements .