Awards set out minimum workplace conditions, rates of pay and other entitlements.
A common misconception held by employers is that Award conditions do not apply if their employees are paid above Award rates. Without a written agreement which sets out which Award entitlements are discharged or set off by salary or wages paid above the Award minimum, this is not the case. In these circumstances, employers who pay employees above the Award rate must also pay penalty rates, allowances and loadings.
An employee’s annual salary cannot be less than what they would receive if they were paid strictly under the Award. This requires employers to reconcile hours worked by employees against the Award rates, allowances, overtime and penalties.
Employers must keep records of the hours worked by employees to ensure that the minimum requirements under an Award are met. This may be in the form of weekly timesheets submitted by employees with an acknowledgement that the timesheet is an accurate record of the hours they have worked.
Our earlier post about record keeping obligations can be accessed here.
Employers who fail to meet the minimum conditions under Awards may face penalties.
What should employers do?
Employers should review their employment agreements to ensure that they:
- are tailored to their workplace (and to each employee); and
- include a clause which provides that salary paid above the Award includes all entitlements under the Award.
Employers must regularly reconcile the hours worked by the employee to ensure that the annual salary meets the minimum entitlements under the Award.
Please contact Heather Richardson if you need advice on whether your employment agreements need updating or on meeting your obligations under an Award.
