One of the most simple, but important decisions that business owners face is how to pay their staff.
While there is much more to rewarding and motivating employees than money, you still need to get it right. An employee’s minimum pay rate can come from an award[1], enterprise agreement[2] or other registered agreement[3]. Employees have to be paid the right pay for all hours they work, including time spent training, in team meetings, opening and closing the business or working unreasonable trial shifts.
If paying by the award is right for your business, you need to keep up to date each year. The Fair Work Commission reviews the national minimum wage and pay rates under awards. Any changes that are made begin on the first full pay period on or after 1 July and these need to be passed on.
There are over 120 awards that cover the wide variety of jobs in Australia and apply to businesses and employees depending on the industry they work in and the type of job worked. Every award has information about who it covers, in the “coverage” clause and the job classifications. Single businesses can be covered by multiple awards depending on what jobs employees do.
A great resource for calculating minimum pay rates is the Fair Work Ombudsman website, www.fairwork.gov.au. Here you will find tools to calculate minimum pay rates, penalties and allowances under an award. You will also find calculators, pay guides and lots of other useful resources.
It’s also important to be aware that certain employees may have different pay entitlements depending on whether they have a reduced work capacity because of disability, if they’re under the age of 21 or if they are an apprentice or trainee.
While it might seem onerous to find the right award and become familiar with it, it’s an important part of understanding your business. After all, wages are a big cost and all businesses should be confident that they are paying staff correctly. If you get it wrong, not only are you risking the relationship that you have with your employees but you put yourself at risk of prosecution.
Where a breach of the NES or a modern award involves a monetary amount, such as underpayment of wages or leave entitlements, an employee or a workplace inspector on their behalf, may sue for recovery of the payment in an eligible court. The employer may not only have to pay the underpaid wages but may also be fined for the underpayment. The maximum penalty under the Act is $63,000 for each breach.
[1] Awards (modern awards) are legal documents that outline the minimum pay rates and conditions of employment. There are 122 industry or occupation awards that cover most people who work in Australia.
[2] An enterprise agreement sets out minimum employment conditions and can apply to one business or a group of businesses
[3] A document between an employer and their employees regarding employment conditions. An agreement must be approved by and registered with the Fair Work Commission.
