Award? Agreement? What’s the difference when it comes to pay?

Many early childhood education and care (ECEC) professionals can be confused when it comes to understanding their pay and entitlements, particularly when terms like “award” and “agreement” are used interchangeably by employers.

To support in developing a stronger understanding, the piece below, based on work done by the Early Learning Association Australia (ELAA) has been prepared as a guide. ECEC professionals can seek further information and guidance from the Fair Work Ombudsman, or from sector specific unions and organisations.

Awards Awards tell employees the terms and conditions of their employment. Most awards cover a whole sector, industry or occupation.

Those working in the ECEC sector are typically employed under one of the following awards:

Children’s Services Award 2010, covering certificate III and diploma-qualified educators and support personnel (i.e., gardeners and cleaners).
Educational Services (Teachers) Award 2020, covering early childhood teachers employed in early childhood education and care services.
Clerks – Private Sector Award 2020, covering admin employees or those who work for a service which is governed by a committee of management.

The various Awards, in essence, outline the benefits (money) an employee should receive, as well as rules around leave, ordinary hours of work, how overtime is managed, what happens for shift workers, and other necessities.

Enterprise agreements Formally known as enterprise bargaining agreements, enterprise agreements function in much the same way as awards, but are specific to an employer - or in some cases, a group of employers.

One prominent example in the ECEC context is the Victorian Early Childhood Teachers and Educators Agreement (VECTEA). A comparison of the terms and conditions of VECTEA versus the Modern Award showcases the differences between the two.

If employees are hired under an agreement, the Modern Award does not apply to them, even if the work they do is covered under the Award.

To ensure that this is fair for employees, the Fair Work Commission examines all enterprise agreements during an approval process. Those who will be employed under the agreement must be “better off overall” when employed under an agreement.

Essentially, this means that when an ECEC employee agrees to work under an agreement instead of under the Award, they need to have some “perks” and benefits to working under the agreement.

The Fair Work Commission will only approve agreements that meet the requirements of the Fair Work Act 2009, and recent discussions held during the Jobs and Skills summit, held in September 2022, indicate that the better off overall test will be changed to make it more simple, flexible and fair.

Enterprise agreements have a nominal expiry date, at which point the agreement can be terminated, or replaced with a new agreement. The agreement continues to be in operation after this date unless it is replaced after bargaining or upon application from the Fair Work Commission.