Understanding Awards

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Understanding Awards

Payroll can be daunting, especially when processed in-house with the constant stress of knowing whether or not you are meeting all your obligations as an employer. PaysOnline is a managed payroll service backed by a team of local experts full of knowledge to help when you need it the most.  By using an outsourced payroll provider such as PaysOnline, you can do away with payroll stresses and focus on your core focus – your business.

Know which award your employees are covered by

Recently Fair Work issued a compliance notice on a religious organisation in Melbourne, which was found to have underpaid an overseas worker almost $80,000.

The case involves an Indian man, aged in his 40s, who was sponsored by the Hindu Society of Victoria on a 428 religious worker visa to come to Australia to work at its Melbourne temple, located at Carrum Downs.

And while the Hindu Society of Victoria submitted that the Fair Work Ombudsman’s assessment was wrong and the Restaurant Industry Award did not apply – Judge Riethmuller has now dismissed the argument, which means the Hindu Society of Victoria must now back-pay the employee according to the Compliance Notice.

What are awards?

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.

Outsourced payroll provider PaysOnline, uses award rate validation tools to help you understand whether you are paying your employees the correct rates of pay.

Who do awards cover?

Awards 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. To work out which award applies, read:

  • the coverage clause (usually clause 4)
  • the job classifications (usually in the pay clause or a schedule).

Awards don’t apply when a business has a registered agreement in place. If your workplace has a registered agreement, go to Fair Work’s Agreements page for more information.

Can a business be covered by more than one award?

A business can be covered by more than one award depending on the jobs the employees do.

Example: 2  awards applying to 1 business

Jo runs a building and construction business. He has qualified carpenters as well as office staff who do administration work. 2 awards will apply to his business:

 Building and Construction Award – for his qualified carpenters

Clerks Award – for his office staff.

Award & agreement free wages & conditions

Most employees are covered by an award or registered agreement, but a few jobs and industries are not.

When an employee is not covered by an award or agreement they are considered to be award and agreement free. Award and agreement free employees may have an employment contract. They are also entitled to at least the:

Myth: all managers and professionals are award free

Many managers and professionals have not traditionally been covered by awards. This includes accountants and finance, marketing, legal, human resources, public relations and information technology specialists.

Check the industry definition and job classifications of each award carefully as some managers and professionals are covered by an award.

Myth: employees who sign a contract aren’t covered by an award

A contract can’t make employees worse off than their minimum legal entitlements. This means that the entitlements in the award that applies to them, and the entitlements in the NES, keep applying, even if they sign a contract that gives them less.

High income employees

Awards don’t apply to high income employees. A high income employee is an employee who:

  • has accepted a written guarantee of annual earnings
  • is guaranteed to earn an annual amount which is more than the high income threshold. The high income threshold changes each year as a result of the Fair Work Commission’s annual wage reviews.  From 1 July 2016, it is $138,900.

A guarantee of annual earnings can be accepted before an employee starts with an employer.

To calculate an employee’s earnings to see if they meet the threshold, include:

  • the employee’s wages
  • the agreed value of non-monetary benefits.

When calculating an employee’s earnings to see if they meet the threshold don’t include:

  • payments which can’t be calculated in advance such as:
    • commissions
    • incentive-based payments and bonuses
    • overtime (unless the overtime is guaranteed)
  • reimbursements
  • statutory superannuation contributions.

By using an outsourced payroll provider such as PaysOnline you can rest assured that your employees will be paid correct and on-time each pay period. The award validation tools available on PaysOnline is only one of the many tools that can be used to make your life a little easier.

Find out which award applies to your employees

Fair Work provides a three-step questionnaire to help you find which award applies to your employees.  Click here to find an award.

Alternatively you can browse Fair Work’ list of awards.

PaysOnline outsourced payroll is here to help.  Contact us today to find out how.

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