Question: Our organisation pays above award rates, so we don’t use time sheets or undertake wage conciliations. Is this okay?
Answer: No.
Paying above award rates may avoid liability for underpayments. However, achieving legal compliance is not as simple.
If you have award-covered employees, in many cases you need to:
- Comply with record keeping obligations
- Comply with award provisions that are related to business operations (e.g. rostering, leave applications and notification of annual shutdowns)
- Notify an employee in writing of their award classification
- Pay an employee wages that are high enough to cover minimum award rates plus other entitlements, which can really add up (e.g. overtime rates, penalty rates, allowances)
In addition, if you are paying employees a fixed salary, instead of paying each award entitlement as separate payroll items, it is critical that you have an effective offset arrangement in place (e.g. via an individual flexibility arrangement, an annualised salary arrangement based on the award provisions, or a set-off clause in the employment contract that is robust and tailored to refer to the relevant award entitlements).
Remember, simply paying above the award rates is not a legal substitute for full compliance with award conditions.
In some situations, there may be other options to achieve compliance – for example, there is the option of putting “guarantee of annual earnings” in place for employees whose salary exceeds the high-income threshold.
If you’re unsure, seek specific advice – prevention is better than cure!
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