‘Coverage’ versus ‘applies’ — important for Fair Work

Q&A

‘Coverage’ versus ‘applies’ — important for Fair Work

Modern awards continue to cover employees under agreements; and, they are displaced (but not negated) by a relevant agreement. This point has important consequences for employers and employees.

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Modern awards continue to cover employees under agreements; and, they are displaced (but not negated) by a relevant agreement. This point has important consequences for employers and employees.
 
The issue was raised in a recent inquiry to WorkplaceInfo.
 
We have been looking at the Fair Work Act 2009 and the interaction between a modern award, an enterprise agreement and the NES.
 
The Fair Work Act seems to refer to the ‘coverage’ of a modern award and the ‘application’ of a modern award. Both terms seems to be referring to the same thing.
 
Is there a deliberate difference in the use of the terms ‘coverage’ as opposed to ‘applies’?
 
The Fair Work Act refers to the ‘coverage’ of a modern award and whether a modern award ‘applies’ to an employee.
 
Modern awards ‘apply’ to the relevant employer and employees when the award provides the conditions applicable to the employees. When an enterprise agreement (or an agreement-based transitional instrument) applies to an employee, the modern award does not apply. The conditions applying to the employee under agreements are those in the agreement and the NES, but not those in the modern award, but the modern award continues to ‘cover’ the employer and employees.
 
Distinction important
 
The distinction between ‘applies’ and ‘covers’ is important.
 
Enforceable conditions derive from the instruments that ‘apply’ but other rights (such as unfair dismissal) are derived from award ‘coverage’. Because modern awards continue to cover employees, they are only displaced, not negated, by an agreement that applies.
 
The award does not cease to exist for these employees and it re-applies if the agreement is terminated.
 
The classification rates in the modern award that covers employees under an enterprise agreement continue to apply as a (changing) minimum for that agreement while it applies.
 
Source: Paul Munro, IR Consultant.
 
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