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Fair Work Australia Guide: Purpose, Priorities and Award
Payroll

Fair Work Australia Guide: Purpose, Priorities and Awards

Australian employers have a legal responsibility to adhere to The Fair Work Act 2009 (FW Act). 

What is Fair Work Australia? 

FW Act is the legislation governing Australia's employment relations system. The FW Act lays out the minimum workplace entitlements and obligations applicable to the majority of Australian employees. The FW Act has established two independent government organisations to manage the system: the Fair Work Ombudsman (FWO) and the Fair Work Commission (FWC). Together they play a key part in regulating the Act. 

What is the Fair Work Commission? 

The FWC plays the role of a tribunal entity and sets the national minimum wage as well as the minimum wages in modern awards. They help resolve work issues and approve enterprise agreements. 

What is the Role of Fair Work in Australia? 

The FW Act regulates the relationship between employees and the majority of private-sector employers. It provides a safety net to ensure employees have minimum entitlements, whether it's the minimum wage, employment entitlements, modern award rates, conditions, and the National Employment Standards (NES). It facilitates flexible working arrangements, protects against unfair dismissals, and contains provisions for general employment protections to ensure employees are treated fairly and protects against discrimination. 

The FW Act provides for minimum pay, leave entitlement, public holidays, redundancy, and a required period of notice for termination. 

What is the Fair Work Ombudsman? 

The FWO was established as a separate government agency by the FW Act 2009. Sandra Parker currently leads FWO, having been appointed to the position of Fair Work Ombudsman in 2018 for a 5-year term. The FWO has offices all over Australia, both in the capital cities and in regional parts of each state and territory, and takes responsibility for employer and employee education to ensure compliance with the FW Act. 

The FWO's job is to make sure that everyone at work gets along and works well together. This includes:

  • Providing an easy-to-access source for accurate and up-to-date information on Australia's workplace relations system;
  • Teaching Australian workers about fair work practices, their rights, and obligations;
  • Figuring out if there was a violation of workplace laws, awards, registered agreements, or FWC orders;
  • Going to court to enforce laws at work and to deter people from doing the wrong thing; and
  • Building strong and effective relationships with industry organisations and unions.

What are the Fair Work Priorities for 2022? 

Each year the FWO introduces strategic priorities for the new year. For the 2022-23 financial year, the focus of Fair Work remains on helping workers and businesses recover from the pressures of COVID-19. Other industries of focus include:

  • Fast food, cafes and restaurants;
  • Agriculture;
  • Sham contracting;
  • Large corporate and university sectors; and
  • Contract cleaning.

Restaurants, cafes, fast food, and agriculture are the main industries of focus for the new year. The FWO has found alarming levels of non-compliance across these industries, with many vulnerable workers making requests for assistance due to underpayment, visa issues, and so on. Likewise, the agriculture industry is heavily reliant on visa holders who are often at greater risk of exploitation due to complex supply chains. 

The university sector has also been added as a new enforcement and compliance priority. This comes as a result of significant underpayments highlighted by university self-reports. As such, universities can expect a high level of enforcement action if they do not prioritise compliance. 

Sham contracting, which is where someone is incorrectly hired as a contractor instead of an employee, is another focus on compliance and enforcement. The FWO aims to provide additional protections such as advice and assistance for vulnerable workers, whether it's young workers or visa holders. 

Small businesses will remain a focus for the FWO due to their contribution to the Australian economy, as the country recovers from the impacts of COVID-19. In the 2021-2022 year alone, the FWO responded to over 50,000 calls to the Small Businesses Helpline, which highlights the need for additional ongoing assistance. 

To find out more about the Fair Work priorities, you can visit the priorities page on the FWO site. 

Grow Your Business with QuickBooks

Fair Work Awards 

What are the Fair Work Awards? 

Australian award rates include minimum rates of pay, hours of work, breaks, annual leave, superannuation, overtime, allowances, public holiday entitlement, sick pay, and employment conditions. 

Hospitality Awards

The minimum hospitality award rates vary per level. At the introductory level, the minimum hourly rate of pay is $20.33, increasing to $25.83 for Level 6 (cook grade 5). 

Retail Awards 

The minimum retail award rates vary per employment level. The minimum hourly rate of pay for a Level 1 retail employee is $23.38 rising to $28.58 for a Level 8 retail employee. 

Construction Awards 

There are varying classes that dictate construction award rates. A Level 1 construction employee should earn a minimum of $22.42 per hour, with the highest level (9) earning $28.97 per hour. 

Modern Awards 

The FWC review has increased the national minimum wage by 5.2 percent and the Modern Award Wages by 4.6 percent. There are over 100 Modern Awards covering a variety of industries and occupations. The first step is to assess whether any of the Modern Awards apply to you by checking your industry. 

Other Awards



Awards Interpretation 

Award interpretation is the process of determining your employees' minimum pay rates and working conditions as laid out by the FW Act. The system came into effect in 2010 and is reviewed regularly. Modern awards provide protection based on the industry a business operates in whilst a retail employee is covered by the General Retail Industry Award. 

You can use the award-finder tool if you aren't sure which awards apply to your business. An award may not cover an employee if their employer operates with a registered agreement; which must be signed by both parties, and registered and approved by Fair Work Australia. You may want to reach out for external advice if you are unsure about which award is applicable.

Award interpretation across every industry includes base wages, allowances, penalties and overtime. The base wage is the minimum rate of pay for ordinary hours. Penalties and overtime include increased rates of pay for outside ordinary hours, public holidays, late nights and weekends. Allowances cover employee compensation for any costs they incur while performing their job, from meal and uniform allowances to accommodation. 

As a result of the complex nature of the award system, mistakes are common and fines for non-compliance rise up to $51,000.

Common Mistakes For Employers When Interpreting Awards

As a business owner, you want to make sure you’re paying your staff correctly. Happy employees make for positive business morale and a greater chance of success. However, there’s no doubt the awards can be sometimes confusing. In fact, many high-profile organisations have been found to be underpaying their workers in recent years, with the most common reasons being not paying the correct overtime, technical errors, not paying enough superannuation or miscalculating penalty rates. 

With over 120 awards currently being used, and different requirements for full-time, part-time and casual employees, it is understandable how this could be confusing. Employers have commonly made a mistake when calculating the following from awards:

  • Base pay rates;
  • Penalties;
  • Tax;
  • Leave entitlements;
  • Super contribution;
  • Employee remuneration; and
  • Overtime or night rates. 

Automating your Award Interpretation with QuickBooks

Fortunately, when you use a solution like QuickBooks Payroll, you don’t need to worry about incorrectly paying the awards as this is automatically calculated by the software set up specifically.



QuickBooks Payroll powered by Employment Hero features inbuilt, automated modern award interpretation. Our extensive list of modern awards is ready to go so you can be compliant in payroll each and every pay run.

There is no need for you to calculate the rates yourself or manually input the rates in the system – QuickBooks Payroll takes care of everything. You don't need to worry about overpaying or underpaying your employees, if they’ll be paid the correct award rate, or if you’ve captured all their entitlements. When you use QuickBooks Payroll, you can also rest assured that your business will be compliant with the FWO.

Please note the automated award interpretation feature is only available with QuickBooks Advanced Payroll. You can find payment plans at the bottom of this page - https://quickbooks.intuit.com/au/quickbooks-online-accountant/payroll/.


While every care has been taken to ensure the accuracy of the information presented as at 1 July 2022, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.

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