Getting payments right
Despite simplifying more than 500 state-based awards into a national set of 122 Modern Awards a few years ago, getting payments right is still a headache. In certain industries – think shift-workers and casual hospitality staff – it’s even tougher for employers to avoid pay mistakes.
Pay by rights
Thanks to inflation and other economic pressures, wages never stay still. Each year, the Fair Work Commission also increases its awards, usually by a couple of per cent. Employers, here's your first trap.
Jason Wales, senior advisor at CCIQ's Employer Assistance Line, says a long-term enterprise bargaining agreement (EBA) that is set comfortably above award can get dangerously close to breaching it as the ‘official’ rate creeps up.
“If the pay rate stays flat on an agreement across seven years, which is a common duration, the percentage award increases set by the FWO can negate that buffer.”
Suddenly, that EBA, to which all parties still agree, is breaching the law.
If you’re lucky enough to have staff who fall under one of the Modern Awards, working out what to do is still not simple.
Choosing your awards
Jason uses a simple example to illustrate how discerning businesspeople must be in interpreting awards.
“It goes on the actual work performed,” he says. “If the business has a retail front on a workshop where the majority of the work is picture farming, you ask what exactly is the role of the staff? Are they retail or do they come under the timber award?
“If the shop has someone in the warehouse, there might not be an appropriate award under retail, but there might be a storeman award under another industry that would be more 'to the role'.
“Again, if the picture frame shop had an office that had someone who just sat at reception, they would be under a clerical award, not retail or timber.”
He says it’s easy for a small business to have three staff under three entirely different industry awards.
In cases where there is a payment oversight, you can expect to hear from the Fair Work Ombudsman. On top of reimbursements, Jason said the Fair Work Ombudsman can and will fine businesses who underpay.
BDO Australia tax adviser Cheryl Overlack said she knew of a Cairns employer who recently had to reimburse 19 casual employees almost $65,000 in unpaid wages.
“The underpayments were identified after Fair Work inspectors randomly visited the business in October last year and examined wages records,” she said.
“It seems that neither the employer or the employees were aware of their obligations under the Fair Work Act, and specifically under three separate Modern Awards.”
CCIQ's Employer Assistance Service helps small businesses resolve around 500 of these issues every month. For expert advice, call us on 1300 731 988 or go to CCIQ Employer Assistance to learn more.