Modern Awards vs Enterprise Agreements: What's the Difference?

A modern award is an industry- or occupation-based instrument made under Part 2-3 of the Fair Work Act 2009. It is the safety-net baseline for a whole sector, setting:

• minimum classification rates — the minimum hourly pay for each level of work;
• overtime rates — the multipliers for hours beyond ordinary hours;
• penalty rates — loadings for weekend, public holiday, night and shift work;
• ordinary-hours rules — how the standard working hours are defined and spread.

Awards apply automatically to employees whose employer's industry and whose classification fall within the award's coverage clause. To illustrate, the Clerks—Private Sector Award 2020 [MA000002] sets, in its own overtime table, the first two hours Monday to Saturday at 150% and later hours (and Sundays) at 200% — figures that exist only because that award provides them. Another award sets different numbers.

An enterprise agreement is made under Part 2-4 of the Fair Work Act. It is a registered, negotiated instrument — agreed between an employer (or employers) and employees — that applies to a specific workplace or business. Where a registered enterprise agreement covers you, it applies in place of the modern award.

Because it can displace the award baseline, an enterprise agreement must pass the Better Off Overall Test (BOOT) before the Fair Work Commission will register it: broadly, employees must be better off overall under the agreement than they would be under the relevant modern award. So an agreement can restructure how rates and hours work — but it cannot leave you worse off overall than the award floor.

Despite their differences, a modern award and an enterprise agreement are both fair work instruments. That matters for enforcement: the rates, overtime and penalty terms of either are legally binding, and paying below them is an underpayment — a civil remedy provision the law lets you pursue.

Whichever instrument applies to you determines your overtime multiplier and penalty rates. In practice, a well-built calculation loads that specific award or agreement's rate table with its dated version — because rates are revised over time (notably at each Annual Wage Review). The version that applied to the pay period in question is the one that governs it.

Some employees are covered by neither an award nor a registered agreement. These award- and agreement-free employees fall back to the National Minimum Wage — $26.44 per hour from 1 July 2026 — and have no legal overtime multiplier by default. Their certain floor is time worked at the ordinary rate, checked against that minimum. See How to Check You're Being Paid at Least the Minimum Wage.

The practical upshot: before you can put a figure on an overtime or penalty premium, you have to know which instrument governs your job, because the multiplier is different in each. Until then, the certain, calculable claim is the value of hours you worked but were not paid for, at your ordinary hourly rate. Underpayments against either a modern award or an enterprise agreement are civil remedy provisions, recoverable within 6 years of the contravention (art. 544). To identify your instrument, start with Which Modern Award Covers You?.

• Which Modern Award Covers You? How to Find Out
• Award Minimum Wages: Why You May Be Owed More Than the Minimum Wage
• Enterprise Agreement Underpayment: How to Check and Claim