The Challenge of Award Coverages for Group Training Organisations

Group Training Organisations (GTOs) play a critical role in Australia’s apprenticeship and traineeship system.

GTO’s place tens of thousands of apprentices and trainees with host employers across a diverse range of industries. This employment model however brings complexity, particularly when it comes to determining appropriate modern award coverage.

Modern award coverage for apprentices and trainees employed by GTOs is generally determined by the industry or occupation of the host employer.

This means:

• The relevant modern award reflects the host employer’s business.
• Conditions such as wages, allowances and entitlements must align with that modern award.
• The National Training Wage Schedule often applies for traineeships, depending on qualifications.

During the initial award modernisation process, the Australian Industrial Relations Commission (now the Fair Work Commission (FWC)) noted the general view that group training organisations which employ apprentices and trainees and place them with host employer, and the employees, should be covered by the award that covers the host employer.

Through the plain language re-drafting of award clauses, the FWC has clarified that:

• to be covered by an industry award, the apprentice or trainee must be hosted by an employer who is covered by an industry award to work in the applicable industry at a location where employees covered by the award also perform work; and
• to be covered by an occupational award, the apprentice or trainee must be hosted in a role that aligns with a classification in that occupational award, and the host employer is not covered by an industry award.

Despite the FWC clarification, inconsistencies continue to emerge across some GTO operations which include:

1. Inaccurate Host Employer Classification

Modern award coverage for GTO’s is complex. One of the biggest challenges is where the activities and the nature of the business at the specific location where the trainee or apprentice is working are not reflective of the industry coverage of the broader company.

Whilst it may seem logical to determine the award coverage based on the industry that the company is commonly associated with, the correct approach is to closely evaluate the nature of the business at the specific location where the trainee or apprentice is working, and this requires an additional layer of analysis and consideration.

3. Expertise Is Required When Determining Award Coverage

With over 100 modern awards, the complexities faced by GTOs in determining modern award coverage cannot be understated. Decision makers often must rely on a basic understanding of what industry a host employer operates in, and the work performed at the specific host employer location for each trainee or apprentice. The decision makers can also be asked to determine modern award coverage when relying upon generic job descriptions, vague duty statements and poorly defined training plans.

While modern award coverage decisions can be low risk for straight forward trades especially for occupational awards (a plumbing apprentice working in a plumbing company), understanding the nuances of the modern award system and how that applies to GTO’s, especially where the host employer is a large and / or complex host, is critical for the person making the decision about modern award coverage.

4. When You Figure It Out Too Late

Of course, where anomalies are detected in modern award coverage, if the detection is one, two or three years into the traineeship or apprenticeship the compliance risks can be significant. This is magnified if numerous trainees or apprentices are misclassified.

To reduce the risk of misclassifying trainees or apprentices when it comes to modern award coverage, GTOs should:

• conduct regular reviews of host employer industry classifications;
• for large, complex, multi-site, multi-division employers, GTO’s should closely examine the industry classification of the host employer at the location where the trainee or apprentice is working, and not simply rely on what the broader company is known for;
• develop and implement robust information gathering and analytical processes to determine the appropriate modern award coverage for trainees or apprentices;
• provide comprehensive modern award interpretation training to staff making the decisions on coverage; and
• periodically check the activities of trainees and apprentices to ensure ongoing modern award coverage compliance.

Determining correct modern award coverage for GTO-employed apprentices and trainees is complex but critically important.

The FWC’s plain language reforms have further clarified the need for alignment with the host employer’s modern award coverage. With proper training, robust systems, and a clear methodology, GTOs can ensure improved compliance while continuing to support high-quality training outcomes across diverse Australian industries for trainees and apprentices.

If you have concerns regarding modern award coverage interpretations or compliance (or any other employment relations matters), please contact us below and one of our Consultants will be in touch within 24 hours.