PART 1
An article written by Ben Schefe
The years are starting to go by quicker and quicker and we are seeing different legal issues every day. However, as each year goes by, you always need to be aware of your obligations as an employer. Although there are many lessons that can be learnt from 2019, the issues below are some of the most topical in the employment sector that, as an employer, you should be considering when moving your business into the New Year.
Paying the Right Wages
Throughout 2019 there were some well known names in the headlines coming under fire for underpaying their employees. Although these matters were mainly relating to hospitality and retail employees, a lot of employers are accidentally underpaying their staff, especially in circumstances when they are paying staff an annual salary or what is known as an “all-up rate”.
An all-up rate or salary is usually an above award hourly rate, or annual salary, that is paid to an employee with the intention of covering some or all other monetary entitlements that an employee may be entitled to under their Modern Award or Enterprise Agreement. These entitlements could be penalty rates for overtime, annual leave loading, and allowances such as a laundry or uniform allowance.
Although this is allowed for in some circumstances, employers usually make the mistake of not doing the correct calculations to make sure the all-up hourly rate or salary actually covers all of the overtime the employee works, or all of the allowances they are entitled to.
In July 2019, the Fair Work Commission made a decision to make changes to approximately 22 Modern Awards in a bid to fight “wage theft”. These changes impose a number of requirements on employers who are paying their employees an all-up hourly rate or salary. These include, but are not limited to, the following:
1. An employer must inform an employee if they are on an annualised wage and advise them what entitlements are covered by the wage. They must also advise the employee the method by which the annualised wage has been calculated. The employer must also keep record of this information.
2. Every 12 months from the commencement of an employee’s employment, and on termination, the employer must calculate what the employee would have been paid under the Award to ensure that their annualised salary is more than this amount. If the annualised salary is less than the amount the employee should have been paid, the employer is required to pay the shortfall to the employee within 14 days.
3. Employers must keep records of start and finish times and unpaid breaks taken by each employee on an annualised salary. These records must be approved and signed by the employee each pay period or roster cycle to ensure they are correct.
The changes to the Modern Awards and these requirements commence on 1 March 2020 and whilst these are some of the main requirements, we strongly recommend that you review any Modern Award that is relevant to your business to ensure that you are complying with all obligations.
