Awards are enforceable documents containing minimum terms and conditions of employment in addition to any legislated minimum terms. Awards provide pay rates and conditions of employment such as leave entitlements, overtime and shift work, amongst other workplace related conditions.
Most modern awards relate to particular industries or occupations. There are currently 121 modern awards of general application.
A small number of enterprise and State reference public sector modern awards cover specific employers and their employees only.
Before the better off overall test can be applied, it is necessary to correctly identify the modern award(s) that cover the employees and their employer(s) in relation to the work to be performed under the enterprise agreement.
A relevant modern award is a modern award that:
If the Fair Work Commission applies the better off overall test by reference to the incorrect award, this may constitute an error providing the basis for an appeal.
'The question of the applicable modern award is a mixed question of fact and law, though perhaps primarily a question of law.'
While only 1 modern award can cover an employee in relation to particular employment, when all of the employees employed in an enterprise and covered by an enterprise agreement are considered, there may be more than 1 relevant award.
The employer is required to identify the relevant modern award(s) for comparison when completing Form F17 – Employer’s declaration in support of an application for approval of an enterprise agreement, which accompanies the agreement upon lodgment.
Modern awards contain interaction rules which govern situations where more than one award may appear to cover an employee. Coverage in most modern awards is defined according to industry however some modern awards apply on an occupational basis. The relevant modern award can be determined by considering the industry of the employer and comparing the duties performed by the employees to the classification definitions in the modern award.
The Commission is then required to consider the coverage of the relevant award at the test time and compare the terms of the agreement to the terms of the relevant award covering the employees at that time.
To determine the award that covers an employee it may be necessary to examine the major, substantial or principal aspect of the work performed by the employee at test time, including the amount of time spent performing particular tasks, the circumstances of the employment and what the employee was employed to do. The question is one of fact to be determined by reference to the duties actually attaching to the position, rather than its title.
Where employees are covered by a transitional instrument which continues to operate, the better off overall test is applied by reference to the enterprise instrument or transitional award, rather than a modern award.
Multiple modern awards may need to be used to apply the better off overall test where different awards apply to different classes of employees to be covered by the enterprise agreement. The awards identified as relevant would be those that would cover the employer(s) and the employees in relation to the work to be performed under the agreement.
 Fair Work Act ss.193(4)(b) and 194(5)(b).
 Construction, Forestry, Mining and Energy Union v BJ Jarrad Pty Ltd  FWCFB 8740 (Boulton J, Asbury DP, Johns C, 28 November 2013) at para. 13; citing Australian Workers’ Union v Coffey Information Pty Ltd  FWCFB 2894 (Watson VP, Sams DP, Roberts C, 24 May 2013) at para. 18, [(2013) 232 IR 266]; and Australian Municipal, Administrative, Clerical and Services Union v City of Fremantle  FWAFB 7161 (Giudice J, Drake SDP, Blair C, 22 November 2011) at para. 18, [(2011) 213 IR 223].
 Fair Work Act ss.193(1) and 193(6).
 Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd  FCCA 4 (28 February 2014) at para. 133; citing Re City of Wanneroo v Michael Lindsay Holmes  FCA 369 (12 September 1989) at para. 45, [(1989) 30 IR 362 at p. 379]; and Re Joyce v Christoffersen  FCA 253 (20 July 1990) at para. 48, [(1990) 26 FCR 261 at p. 278].
 Transitional Act Sch 7, Pt 4.