20 February 2024

Do I Have to Pay My Employees Under an Award? Understanding Your Payroll Obligations

a photo of calculator and pen over a paper

Running a business in Australia comes with many legal obligations when it comes to paying your employees. One common area of confusion is around awards – do I need to pay my staff under an award? If so, how do I know which award applies?

Getting this wrong can lead to serious consequences, so it’s crucial for all employers to understand their payroll obligations and responsibilities.

Read on if you want to get it right…

After reading this article you will…

  • Understand what awards are and which employees they cover
  • Know how to determine the right award(s) for your business
  • Be aware of the key entitlements awards provide to staff
  • Recognise the risks and consequences of non-compliance
  • See why getting expert payroll advice is crucial for award interpretation and compliance

The Short Answer

Yes, most employers are legally required to pay their employees according to the minimum pay rates and conditions set out in the relevant modern award(s). Over 100 industry and occupation awards exist, with coverage depending on your business activities and employee roles.

Failing to meet award obligations carries major repercussions like large back-pay bills, penalties, and reputational damage. Getting on top of awards is complex yet essential. Expert Australian payroll providers and HR Advisors such as Dexterous Group can provide expert guidance on determining the right awards and maintaining compliance over time.

Now let’s explore awards and your Payroll Obligations as an employer more closely…

What Are Awards and Who Do They Cover?

Awards, also known as modern awards, are legal documents that outline the minimum pay rates and conditions that apply to employees in particular industries or occupations. There are over 100 industry and occupation awards that cover most people working in Australia. Awards apply based on the industry you operate in and the types of jobs your employees perform.

For example, if you run a construction business, builders and carpenters would likely fall under the Building and Construction Award. However, your office administrator would fall under the Clerks Award.

It’s important to note that if you have a registered agreement in place, such as an enterprise agreement, this may have conditions over and above the award. Registered agreements set out minimum employment terms and conditions for your business and employees.

Determining Which Award(s) Apply to Your Business

Figuring out which award(s) cover your employees is crucial yet can be complex. Here are some tips:

  • Carefully review award coverage clauses: Each award outlines who it covers, usually in Clause 4. This will specify industries, occupations etc.
  • Check award job classifications: Awards also classify different job roles with associated pay rates. Review these classifications closely.
  • Use Fair Work tools: You can use Fair Work’s Find My Award tool to search for awards by keyword, or browse their list of all modern awards.
  • Get help if needed: With over 100 industry and occupation awards, the system can be confusing. Consider getting advice from payroll experts, HR consultants or employment lawyers if you are uncertain.

It’s also important to recognise that more than one award may cover your business depending on the different roles performed. For example, a construction firm could need to comply with both the Building Award (for builders) and Clerks Award (for administrative staff).

Key Entitlements Covered By Awards

If an award applies to your employees, it provides a range of minimum entitlements you must meet, including;

Pay

  • Minimum pay rates for standard hours, overtime, weekends, public holidays
  • Allowances like meal, shift, vehicle, travel allowances

Hours

  • Maximum standard hours before overtime applies
  • Rules around rostering and shift lengths

Breaks

  • Minimum break times between shifts
  • Meal break lengths and frequency

Leave

  • Annual leave, personal/carer’s leave, compassionate leave

Other

  • Rules for stand-by or on-call arrangements
  • Notice periods for roster changes
  • Redundancy pay calculations

Award wage rates and allowances are updated regularly by the Fair Work Commission. It’s crucial employers review awards to ensure their pay practices remain compliant with latest minimums.

Consequences of Not Paying Award Entitlements

Failing to pay your employees their full award entitlements carries serious repercussions, including:

Financial penalties: The Fair Work Ombudsman can impose significant fines based on the severity and scale of underpayments. Directors may also face criminal charges under proposed new wage theft laws.

Back pay orders: Employers can be ordered to back pay staff, sometimes over several years. This can cripple cash flow.

Productivity impacts: Staff morale, retention and performance all suffer when staff are underpaid. With complex awards and frequent rate changes, inadvertent underpayments can (and do) occur. However, turning a “blind eye” to obligations only worsens outcomes. Being proactive is key.

Need Expert Help with your Payroll Obligations?

Navigating Australia’s complex industrial relations system is challenging, even for experienced operators. For time-poor business owners, staying on top of awards, agreement and payroll compliance is near impossible. This is where outsourced payroll services can provide expert guidance and support.

Rather than tackling payroll yourself, you can partner with specialists like those at Dexterous Group to handle everything safely, accurately and efficiently.

As payroll legislation professionals, Dexterous offers:

  • Ongoing award interpretation – Determining correct wages and entitlements
  • Compliance auditing – Checking you meet obligations
  • Process automation – Streamlining payroll tasks like payslips, reporting, super payments
  • Advisory services – Helping with scenarios like hiring, redundancies, leave

By leveraging external expertise, you can ensure full award compliance without becoming an industrial relations expert. The peace of mind this provides allows you to focus on your core business.

Don’t Risk Non-Compliance – Seek Expert Payroll Help

Connect with leading payroll providers to ensure you interpret awards correctly and remain compliant over time. The investment will pay dividends through more engaged staff, no fines, and better business outcomes.

To learn more about award compliance support for your business, contact the payroll specialists at Dexterous Group at: https://dexterousgroup.com.au/ .

References:

Fair Work Ombudsman. (2024). Awards. Retrieved from
https://www.fairwork.gov.au/employment-conditions/awards

Australian Institute of Company Directors. (2024). Criminalising wage theft. Retrieved from
https://www.aicd.com.au/board-of-directors/duties/liabilities-of-directors/criminalising-wage-theft.html