Are you 100% sure you’re paying correctly?

JPEG image 20Running a business & employing people is hard, workplace legislation is not the easiest to navigate and depending on your type of business its not uncommon to be paying under multiple Awards. So how do you know you are getting it right?

All employees in WA are employed under either the National or State system of industrial relations. If you are a Sole Trader eg: Jane Smith T/as Janes Cafe, an unincorporated partnership eg: Jane & Bob Smith T/as Janes Cafe or an unincorporated trust eg: Jane and Bob Smith as trustee for Janes Cafe you fall under the WA Industrial Relations Commission. The majority of employees in Australia fall under the National system which covers all constitutional corporations or in layman’s terms it is any business with “Ltd” or “Pty Ltd” after its name. All other states in Australia have referred their industrial relations powers to the National system but Western Australia being Western Australia has chosen to keep the State based system.

If you’re a State based employer you can search Awards and pay rates at the Department of Commerce or can obtain pay rates by calling Wageline, National system employers can obtain the same information from Fair Work

State system employers derive their conditions of employment from either;

  • the Minimum Conditions of Employment Act 1993
  • a state award
  • an industrial agreement (replaces an Award, pay & conditions must be equal to or exceed the applicable Award)
  • an employer-employee agreement (replaces an Award, pay & conditions must be equal to or exceed the applicable Award)
  • a common law contract of employment (pay & conditions must meet the Minimum Conditions of Employment)

National system employers derive their conditions of employment from either;

  • National Employment Standards (NES)
  • a modern Award
  • an Enterprise Agreement (replaces an Award, pay & conditions must be equal to or exceed the applicable Award)
  • a common law contract (pay and conditions must meet the NES or the relevant Award if applicable)

Howard era Australia Workplace Agreements (AWA or Individual Workplace Agreement)  have not been permitted to be entered into since 2008, if you are still using these stop now!

An Award (or alternative) will set out the minimum conditions for an employee such as hours of work, spread of hours, maximum hours per day / week / 28 day cycle before penalty rates apply, breaks, allowances, leave entitlements, redundancy provisions, consultation requirements and many more provisions.

It will also set out pay level classifications & definitions for positions, this section of the Award will detail the competency level required to adequately perform the role and will cross reference this information to an hourly rate.

Wages irregularity can fly under the radar if employees don’t understand their rights and are concerned for their jobs if they raise issues, but if things catch up, they can do so with a vengeance. For business owners who make a practice of underpaying staff, the risks are three-fold: penalties; payment of the amounts underpaid, plus interest; and damage to reputation.

An underpayment claim can go back six years, so systematic underpayment can add up to a large amount and, of course, if one employee has a claim of this kind upheld every other employee who has been underpaid in the same way will also have a claim on the same basis, so the risk of the issue spreading is substantial.