If your business relies on 4-week averaging under a modern award, this is an issue you cannot afford to overlook. 

This article builds on my recent website article examining the complexities of annual salaries and incorporating leave loading, which generated significant discussion about how monetary obligations arise under modern awards. 

This article focuses on how averaging of ordinary hours under the modern awards applies in practice following the Federal Court’s decision in Fair Work Ombudsman v Woolworths Group Limited. 

Even if you comply with an award’s averaging provisions across a roster cycle, you can still have an underpayment within a particular pay period. 

The Legal Framework: Averaging vs Pay Periods 

Modern awards often allow ordinary hours to fluctuate across a roster cycle. 

For example: 

• Ordinary hours may be averaged over 4 weeks 

• The average must not exceed 152 hours (38 hours per week) 

• Higher hours in one week can be offset by lower hours in another 

That flexibility remains lawful and commercially useful. 

However, pay periods are a separate legal concept. 

Pay periods determine: 

• When wages become due and payable 

• When compliance is assessed 

• When an award debt must be discharged 

The Woolworths decision confirms that award obligations must be satisfied within each pay period. 

You cannot offset an underpayment in one fortnight by overpaying in the next — even if both fall within the same 4-week roster cycle. 

How This Works in Practice 

Assume: 

• The award allows averaging over 4 weeks 

• You pay employees fortnightly 

An employee works: 

• Week 1: 50 hours 

• Week 2: 30 hours 

• Week 3: 40 hours 

• Week 4: 32 hours 

Total = 152 hours 

Under the award’s averaging provision, those 152 hours can properly be treated as ordinary time across the cycle. 

That part is compliant. 

But if you pay fortnightly: 

• Fortnight 1 = 80 hours 

• Fortnight 2 = 72 hours 

You must ensure: 

• The ordinary-time pay for 80 hours is fully covered in Fortnight 1 

• The ordinary-time pay for 72 hours is fully covered in Fortnight 2 

There is no “borrowing” between fortnights. 

Averaging determines which hours are ordinary. It does not change when the resulting wages become legally due. 

Employers must now ask two separate questions: 

1. Does the roster comply with the award’s averaging rules? 

2. Does each pay period independently satisfy the award monetary obligation that arises in that period? 

You need both. 

How Winter Workplace Consulting Can Help 

Modern award compliance is becoming increasingly technical — particularly where averaging provisions, annual salaries and pay period obligations intersect. 

We regularly assist employers to: 

• Review salary structures and offset clauses 

• Audit averaging arrangements  

• Identify potential underpayment exposure 

• Implement compliant and commercially practical solutions 

If you would like advice tailored to your organisation’s specific award coverage and payment structure, please contact us.