Are You Sure You’re Meeting Your Award Obligations?

Awards set minimum pay rates, conditions and entitlements such as overtime, allowances and leave loading.

Many employers mistakenly believe that paying above Award rates automatically covers these entitlements. However, unless the employment agreement clearly states that the higher salary is in compensation for those entitlements, this is not the case. 

Without an adequate clause in a written employment contract, Employers who pay above Award rates may still have to pay overtime, allowances or penalty rates in addition to the employee’s salary and may be exposed to underpayment claims and penalties.

Importantly, an employee’s annual salary cannot be less than what they would receive if they were paid strictly under the Award. 

 

This Means Employers Must:

• keep accurate records of the hours worked by employees. This may be weekly timesheets signed by employees with an acknowledgement that the timesheet is an accurate record of the hours they have worked.
• regularly reconcile hours worked to ensure that the annual salary meets the minimum entitlements under the Award.

 

What Should Employers Do?

Employers should review their employment agreements to ensure they:

• are tailored to their workplace (and to each employee);
• include a clause which provides that salary paid above the Award includes all entitlements under the Award; and
• regularly check hours worked against remuneration and the Award.

 

Failure to meet minimum Award conditions exposes an employer to underpayment claims, penalties and reputational risk

Please contact Heather Richardson if you need advice on whether your employment agreements sufficiently offset minimum entitlements under an Award.