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Business Downturn? Take this essential first step when you have to reduce employee numbers or hours

With COVID-19 dramatically changing the Australian business landscape, many small and medium-sized employers are finding themselves in unchartered waters. They are having to consider a number of scenarios with regards to their business, such as:

  • restructuring their operations;
  • scaling down their operations;
  • closing down their operations.

These are all difficult decisions – and they impact both the employer and the employees.

redundancy employees

As an employer, knowing the minimum terms and conditions of employment that apply to your business is key to effectively executing any of the above scenarios that may be applicable to your business.

This is where Modern Awards come into play.

So what is a Modern Award?

A Modern Award (‘Award’) is an enforceable document which sets out the minimum terms and conditions of employment, in addition to the National Employment Standards (NES). There are more than 120 Modern Awards currently in operation.


  • apply to all employees covered by the national workplace relations system.
  • are industry or occupation-based, and apply to employers and employees who perform work covered by the Award.

Awards provide for entitlements such as:

  • hours of work
  • rates of pay
  • overtime
  • penalty rates
  • breaks
  • allowances

Importantly, Awards also contain a Consultation and Dispute Resolution clause which will need to be complied with in the event one of the above 3 scenarios apply to a business.

Some employers can be covered by more than one award depending on the jobs the employees do. The scenario below is an example.

John and Kathy’s Cleaning Service

John and Kathy run a cleaning services business. They employ full-time cleaning services employees as well as office staff who perform administration work. Two awards will apply to their business:

  • Cleaning Services Award 2010 (for their cleaning services employees)
  • Clerks – Private Sector Award 2010 (for their office staff)

Given the current business climate and decrease in demand for cleaning services, John and Kathy are looking to scale down their business operations. As part of this scaling down, they are considering the option of only having part-time cleaning services employees for the next 3 months. Their preference is to retain their current cleaning employees, given the knowledge the employees have of the business and existing clients.

To understand the process for undertaking this change, they should, as a starting point, review clause 8 (Consultation about major workplace change) of the Cleaning Services Award 2010. This clause provides key information in relation to what an employer is required to do when it comes to consultation about changes in the workplace. You can look up awards on the Fair Work Website.

cleaning business employees redundancy

(Note: this is a general example only. There may be other clauses in the Award that need to be complied with, depending on the details of the changes. If you require advice with regards to your specific circumstances, you should seek employment legislation advice or contact Sobha Nair (see contact details below).

There are circumstances, however, when Awards don’t apply:

  • If a business is covered by a registered agreement, it is usually the case that the conditions of a modern award are no longer relevant. However, if the base rates of pay in an agreement are lower than those in the relevant modern award, the base rates of pay in the modern award will apply.
  • Managers or higher income employees may not be covered by a modern award even if one applies to the industry in which they work

When an employee is not covered by an award of agreement, they are considered to be award and agreement free. In these situations, the National Minimum Wage and the NES will form the minimum terms and conditions of employment.

As an employer, it is essential that you comply with the minimum terms and conditions of employment as outlined in the Award(s) which cover your industry or the jobs being performed by your employees. Non-compliance or pleading ignorance will not be taken lightly by the Fair Work Ombudsman (FWO), as demonstrated by the recent media coverage of both small and large employers who underpaid their employees.

The FWO can undertake a number of actions against an employer who does not comply with:

  • workplace laws; and/or
  • minimum terms and conditions of employment as outlined in the relevant Award(s).

These actions include:

  • Compliance notices
  • Infringement notices with fines
  • Enforceable undertakings
  • Additional training at the employer’s cost
  • Litigation resulting in Court imposed orders (such as financial penalties)

If you are unsure about which Award applies to your business or how to effectively execute changes within your business whilst ensuring compliance with workplace laws and Awards, contact Sobha Nair for an obligation-free 20 minute phone consultation about your circumstances.

About Sobha Nair

Sobha Nair HRSobha is an experienced Human Resources professional who has worked closely with employers from various industries for over 20 years to implement effective workplace solutions. Her approach is to understand the business and work in consultation with key stakeholders in the business to develop and implement pragmatic solutions.

Sobha’s areas of expertise include:

  • employment legislation (Fair Work Act, NES, Awards)
  • HR operations (recruitment, coaching, managing performance, ending employment)
  • employee development
  • business change / restructure

Sobha can be contacted via:
mobile on 0437 750 964

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