Who must pay employees in accordance with the applicable modern award?
The applicability test for Pay employees in accordance with the applicable modern award (FWO and FWC), computed across 35 industries, 9 business structures and 6 size bands.
Short answer: Some businesses
Applies when the business has employees.
What the obligation is
Apply the correct modern award rates, penalties, allowances, and overtime — wage theft is now criminal.
Employers must apply the correct modern award (or enterprise agreement) covering each employee, including minimum rates, penalty rates, overtime, allowances, and casual loading. From 1 January 2025, intentional underpayment is a criminal offence under the Fair Work Act, carrying up to 10 years imprisonment for individuals and 3× benefit penalties for corporations.
The applicability test
Applies when the business has employees.
How the regulator frames it: All national-system employers (most private-sector employers).
What triggers it: Employing staff covered by a modern award.
Jurisdiction: Commonwealth law, so the test is the same in every state and territory.
Which industries are in or out
Outcome across the 35 industries Rules Mate maps (35 of 35: depends on size or structure).
The answer is the same in every industry: depends on size or structure. Industry does not change who must comply.
Business structure and size
Structure does not change the answer across all industries: for every structure the answer is "depends on size or structure".
| Size band | Answer across all industries, any structure |
|---|---|
| No employees (turnover $100K–$1M) | No |
| 1–5 employees (turnover $100K–$1M) | Yes |
| 6–19 employees (turnover $1M–$3M) | Yes |
| 20–99 employees (turnover $3M–$10M) | Yes |
| 100–499 employees (turnover $10M–$100M) | Yes |
| 500+ employees (turnover $100M–$1B) | Yes |
Worked examples
Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:
- Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: applies. You have employees (6–19)
- Pty Ltd company in real estate agents with no employees, turnover $100K–$1M: does not apply. Requires employees.
What you must do, and when
- When due
- Each pay cycle, ongoing.
- Frequency
- Ongoing
- Evidence to keep
- Time records, payslips matching award calculations, classification documentation.
- Status
- Current
- Priority
- Critical
Penalty for not complying
Maximum penalty: Civil penalty up to $21,840 per breach (individuals), $109,200 (small business body corporate) or $546,000 (body corporate with 15+ employees); criminal wage theft up to 10 years prison + 3× benefit.
Criminal liability
Audit or assurance level
Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.
Dates in the compliance calendar
Enforcement examples
- FWO v Woolworths Group Limited (salaried manager underpayments) (2024): Annual award reconciliations for salaried staff must compare set-off against full award entitlements every pay period, not annually.
- FWO v Rockpool Dining Group (underpayment) (2024): Hospitality industry top FWO enforcement target; self-disclosure attracts civil resolution.
- FWO investigation — Bunnings Group (allowances + petty cash) (2024): Allowances within awards must be enumerated in pay engine — manual petty-cash handling at scale is failure-prone.
Obligations with the same applicability test
If this obligation applies to you, so do these 11: the engine uses the same rule for each.
- Pay superannuation on every payday (Payday Super)
- Report under Single Touch Payroll Phase 2
- Honour employees' right to disconnect (s 333M)
- Verify work rights via VEVO before employment
- Comply with Paid Parental Leave scheme (26 weeks by 1 July 2026)
- Pay annual leave loading where the award or contract provides
- Provide 10 days personal/carer's leave per NES
- Provide 10 days paid family + domestic violence leave (FDV)
- Document VEVO checks + retain employer records (s 245AYL Migration Act)
- Provide minimum notice of termination (NES s 117)
- Right to Disconnect (s 333M FWA)
Where it sits in the corpus
Rules Mate tracks 1 published obligation tagged "wages", 1 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 1 of those apply outright. This obligation is rated critical priority and carries criminal liability, and is an ongoing duty.
Regulator, legislation and tools
Regulated by Fair Work Ombudsman and Fair Work Commission.
FWO: Enforces compliance with the Fair Work Act, awards, and agreements. Investigates underpayments, brings civil penalty proceedings, and publishes compliance notices.
FWC: National workplace relations tribunal. Sets modern awards and the national minimum wage, resolves unfair dismissal and general protections disputes, and registers enterprise agreements.
FW Act: Federal workplace relations Act.
Free tools that help with this obligation:
Questions
- Who must pay employees in accordance with the applicable modern award?
- Applies when the business has employees.
- Do sole traders need to pay employees in accordance with the applicable modern award?
- Depends on size or structure. Across every industry and every size band, the engine's answer for a sole trader is: depends on size or structure.
- Do businesses with 1–5 employees need to pay employees in accordance with the applicable modern award?
- Yes (1–5 employees, turnover $100K–$1M).
- When is "Pay employees in accordance with the applicable modern award" due?
- Each pay cycle, ongoing.
Related
Sources
Computed by the Rules Mate applicability engine from the published obligation corpus; facts last checked 3 October 2026. Rules Mate is not a law firm and this is general information, not legal advice. Confirm your position with the regulator source or a qualified adviser before acting.