The importance of understanding your pay requirements
As an employer, it is your responsibility to be aware of and adhere to all relevant employment legislation that applies to your employees and your business.
This includes ensuring you are meeting pay requirements to employees in accordance with the relevant Award or agreement. Generally, any changes to pay rates will come into effect from the first pay period after 1 July of that year. So, it’s time you get yourself up to speed.
Employment law isn’t static. There are changes which can make it challenging to ensure you’re meeting your commitments.
How can you make sure you’re doing the right thing when it comes to meeting pay requirements and what are the consequences of failing to comply with them?
Understanding Modern Awards
The majority of employees in Australia will have their terms and conditions of employment governed by a Modern Award.
Modern Awards outline the minimum terms and conditions of employment (including pay requirements) and sit on top of the National Employment Standards (NES).
The specific award under which an employee falls will vary, depending on the industry in which they work and their particular role.
Exceptions to coverage by a Modern Award are:
- Most managerial positions
- Employees whose salary is above the high-income threshold
- Where the business is covered by a registered agreement, the conditions of a modern award may no longer be applicable – with certain conditions( e.g. if the base rate of pay in a registered agreement is lower than those in the relevant modern award, the base rate of pay in the modern award will then apply:
- Where the worker is employed by federal, state or local government
Meeting pay requirements
Each Modern Award outlines the minimum pay rate for workers covered under that award. This determined rate for each worker is calculated based on a number of factors. These include:
- Employee level
- Employee age
- Employment type (eg. full time/part time/casual)
- Weekends and public holiday work
- Overtime work
Based on these factors, employers are obligated to ensure they are meeting the minimum pay requirements set out in the relevant award and the classification for each individual employee.
It is also critical to remember that “each year, the Fair Work Commission reviews both the National Minimum Wage and minimum pay rates under awards”.
With the end of the financial year just around the corner, any changes to pay rates will generally come into effect from the first pay period after 1 July of that year.
This means that each year, employers must be aware of any changes coming into effect and ensure that they are meeting their pay requirements to workers.
The risks of negligence
Failing to meet your pay requirements to employees can lead to serious repercussions, even if it was an honest mistake.
Breaching the Fair Work Act can lead to substantial penalties – up to $12,600 for an individual and up to $63,000 for a corporation.
Employers who don’t pay their workers in accordance with the relevant Award may also be liable for employee back-pay and other entitlements.
Depending on the specific context, these costs can be considerable.
One high-profile example of this is the case of celebrity chef George Calombaris, whose hospitality empire was forced to backpay a staggering “$7.8 million in wages and superannuation after admitting to underpaying more than 500 current and former employees”.
The lesson here is clear. If you fail to meet your pay obligations to workers, there can be severe consequences.
Akyra’s key takeaways
- Employers are obligated to pay their workers the minimum rates outlined in the relevant Modern Award
- Modern Awards and the minimum wage are reviewed each year – meaning it is crucial for employers to stay up-to-date and know what their obligations are
- Failing to meet pay requirements to workers can lead to serious financial and legal consequences for employers
NEED MORE INFORMATION?
Akyra can help your business to assist and support all your questions and concerns related to employee benefits. Please contact Akyra on 07 3204 8830 or book a free 30-minute consultation for an obligation-free conversation.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
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Networking, Clients, Workplace Behaviours, Bullying, Discriminatory And Harassment Employment Agreement, Retraint Of Trade Clause, Termination, Termination Notice, Unfair Dismissal, Employment Contrct, Casual Workers, Work From Home, Reasonable Management Action, Dismissal, Superannuation, Award Wages, Award Wage Increase, Superannuation, Budget, Training, Upskilling, Public Holidays, Personal Leave, Working Parents, Discrimination, Pay Requirements
Sources:
https://www.evansfaull.com.au/hr-solutions/contracts-and-awards, https://betterhr.com.au/fines-penalties-fair-work-act/, https://www.fairwork.gov.au/pay-and-wages/minimum-wages, https://www.abc.net.au/news/2019-07-18/george-calombaris-made-establishment-backpays-underpaid-workers/11320274, https://www.fairwork.gov.au/tools-and-resources/fact-sheets/minimum-workplace-entitlements/modern-awards
