The Fair Work Act and other legislation impacting employer / employee relationships can be extremely complex to navigate, especially if you are a smaller organisation and don't have a dedicated internal HR department full of professionals in the field. Fines for individual breaches of the Fair Work Act can exceed $60,000, so managing the associated risks is imperative to protect your company.
One area of common confusion for employers is determining applicable awards and
classifications. Most workers in Australia will have the majority of their terms and conditions of employment governed by modern awards. There are more than 100 of these awards, and understanding which awards apply to your employees is the beginning of legal compliance.
Annual awards review
Reviewing awards annually can help you ensure that changes to awards or to your business or method of employment has altered your compliance obligations. In many cases, it may seem obvious what specific industry or occupational award applies. In others, it may be murkier. Even if you think you know what award your employee is covered by, you should double check in case another award has precedence. The Coverage and Definitions clauses and Job Classifications of potentially applicable awards should be carefully examined, to help you determine if they do in fact apply to your workforce. Once you find the award, you must apply it correctly.
Industry vs. occupational awards
If you cannot identify an industry-specific award that applies, or the specific industry award that applies to some of your staff doesn't seem to apply to others, you may need to consider an occupational award for your other workers. A common application for this kind of dual awards assignation is in the case of retail or hospitality industries, where admin staff may be more appropriately classed by occupation as being in the Clerks Private Sector category. As before, review the Coverage and Definitions clauses and Job Classifications to see if your categorization is correct. If neither an industry or occupational award apply to a worker, or group of workers, consider if the Miscellaneous Award may apply.
Award free workers
In rare cases, there may not be a suitable award for some or even all of your workers. In such cases, if your industry/organisation does not have a registered agreement in place, workers could possibly be considered "award free". However, employment relevant legislation governing superannuation and work health & safety as well as the National Minimum Wage and National Employment Standards will still apply to these employees.
Awards classifications
Award-covered employees must have the correct award classification applied in order to ensure that you have fulfilled your payment obligations in accordance with their award. All of the modern awards include a classification structure. In most cases, the classification details can be easily found as a Schedule B attached to the award, outlining the characteristics and typical/skills duties of persons engaged at each classification level.
If you are unsure how to classify an employee, the Schedule B classification structure in some awards will also include examples of roles that typically apply to each classification. By carefully reviewing the relevant award's classification structure for each employee, you can help ensure you choose the correct classification. Ideally, this will be done upon hiring, as part of the employee's offer letter, position description, and contract.
Once awards have been identified and the appropriate classification attached to each role, you can use the Fair Work Pay Calculator to determine the minimum applicable rates of pay and remain in compliance.
Reviewing your awards can be a complicated and grueling HR task. Our Human Resources Consulting team can help with this process. Contact our Human Resources Consultant, Christine Guy today.
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