Often the obvious can be ignored in the business of everyday trading. Increasingly, employees are becoming more aware of their rights at law and under their respective Modern Award.
While this may be familiar territory for many, this article is a quick reminder of the issues Awards deal with, especially as civil penalties can approach six figures for breaching a term of an Award.
Employment status and classification
Each Award sets out the definition of a full time, part time and casual employee (and often shift workers). Full time employees typically work 38 hours a week (some Awards specify 35 hours) which may be averaged out e.g. 76 hours per fortnight or 152 hours over 4 weeks.
All Awards specify that a part time employee will work less than 38 (or for some Awards, 35) hours per week with a minimum number of shifts. Generally, almost all Awards prescribe that the employer must specify the days and times the part time employee works. Each Award will also detail the minimum period of time an employee is to be rostered or paid for their work (engagement period), which is typically 3 hours.
All Awards require that casual employees must be paid an additional 25% loading on their minimum ordinary hourly rate. The loading is payable in place of other employee entitlements such as annual and personal leave. Casuals also have a minimum engagement period, again typically 3 hours.
Classification of employees (for example, level 2 or 3, etc.) is particularly important as it determines the minimum rate of pay they are entitled to. Often employees’ duties evolve over the course of the year.
We encourage employers to undertake an annual detailed analysis of an employee’s job description in comparison to the classifications under their respective Award classifications. Getting an employee’s classification wrong could result in you having to defend an underpayment claim with the Fair Work Ombudsman, Local Court or even Federal Court, which can be costly and time consuming.
Ordinary hours
Ordinary hours must be worked within a certain “span of hours” stipulated by each Award e.g. between 7am and 7pm Mon-Fri for the Clerks Private Sector Award. Awards will also place limits on the number of ordinary hours that can be worked per day, typically 10 hours. Finally, most Awards prescribe that if part timers work more than their agreed (in writing) rates, overtime rates must be paid.
Breaks
Most Awards require employers to ensure that employees get one unpaid 30-60 minutes meal break if they work more than 5 hours at a time, and if they do not, they must be paid double time thereafter.
Allowances
Each Award sets out unique allowances tailored to the employees it purports to cover. Some common allowances include: meal, vehicle and higher duties allowances.
Overtime
An employee is entitled to be paid overtime for:
- work in excess of the ordinary weekly hours; or
- work in excess of 10 ordinary hours on any one day, excluding unpaid meal breaks; or
- work outside the span of ordinary hours; or
- overtime worked on a rostered day off that is not substituted or banked; and
- when they do not have at least 10 consecutive hours off duty between shifts.
Each Award will have specific overtime rates depending on the day of the week and the number of overtime hours worked.
Penalty rates
Penalty rates are different from overtime rates. Penalty rates are higher rates of pay for
ordinary hours worked at specified times and on specified days (as opposed to overtime rates for hours worked
in excess of, or outside, ordinary hours). Each Award sets out penalty rates which vary. The multiples are lower in some Awards, for example the
General Retail Award.
Consultation
Major workplace change
When making major changes in production, programs, organisation, structure, or technology that significantly affect employees, you must follow the consultation process under the prescribed Award.
This involves informing affected employees of the changes, discussing the changes with them, and starting discussions as soon as possible after the decision is made. You must provide details of the changes, their expected impact, measures to mitigate adverse effects, and promptly consider employee feedback.
Changes to rosters or hours of work
If you propose to change the regular roster or ordinary hours of work of an employee (other than an employee whose working hours are irregular e.g. a casual) you must consult with any employees affected by the proposed change and undertake a similar process to the outlined above.
Conclusion
It is important not to be complacent and regularly check the relevant Award(s) for any updates that may affect your employees and their entitlements. The consequences of not getting the basics right can be very costly to your business’ revenue and reputation.
Should you have any questions or require assistance, please contact Partner, Warwick Ryan.
Article written by Partner, Warwick Ryan and Solicitor, Molly Robinson.