With 122 awards to choose from, finding the right award to pay your employees under can seem like a daunting task. However not spending the time to get it right can have far reaching consequences. You may assume for example a clerk will be covered by the ‘Clerks Private Sector Award 2010’, however there are provisions for clerks in the ‘Hospitality Award (General) Industry 2010’and the ‘Social, Community, Home Care and Disability Services Industry Award 2010’, just to name two. Choosing the wrong award in this case will begin with incorrect wage payments and escalate from there.
In such a scenario it becomes apparent that using the wrong award can quickly become a very expensive exercise for a business. The cost might come in the form of overpayments if unnecessary penalties are being paid, or it can come at the expense of employee performance if they find themselves being underpaid. However by far the biggest danger in terms of cost is if a company is found to be non-compliant by Fair Work Australia, where the potential exists for fines to reach into the hundreds of thousands of dollars.
Another common issue is the intermingling of the terms ‘penalty’ and ‘overtime’, when in fact they are different. One example of a penalty is a higher hourly rate for working on a weekend. As long as the hours worked fall within the boundaries of ordinary time earnings, regardless of the day worked, the payment is not classed as overtime.
As overtime doesn’t carry the entitlement to superannuation and leave accruals, an employee will be disadvantaged if their penalty hours are being replaced with overtime. What it means for the company is that it will not be meeting its obligations, thereby being exposed to the potential of hefty fines for being in breach of the Fair Work Act.
Lots to think about.