One of the most common mistakes employers make is not paying their employees correctly. And, while often unintentional, the smallest errors add up over time, and can lead to large consequences for underpaying employees.
Recent cases before industrial tribunals have resulted in companies having to repay significant sums of money, causing major cash flow issues for the individual businesses. These cases have also been reported in the media, creating damage to individual brands and businesses.
How do you avoid hitting the spotlight for all the wrong reasons?
The easiest way to avoid trouble is to simply ensure you pay every employee 100% correctly in accordance with legislative requirements. Most of these requirements can be found within the Fair Work Act 2009. This massive document outlines how our workplace relations system operates.
National Employment Standards
The National Employment Standards (NES) detail the minimum employment entitlements that have to be provided to all employees. They create a basic safety net for all employees, regardless of industry or size of business. If you provide your people with anything less, you will be up for some hefty penalties and fines.
The 10 minimum entitlements of the NES relate to:
- Maximum weekly hours of work
- Flexible working arrangement requests
- Parental leave and related entitlements
- Annual leave
- Personal/carer’s leave and compassionate leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Provision of Fair Work information statement
The provisions set down in these standards are mandatory. You don’t have any discretion to ignore, exclude or provide anything less than these entitlements.
On top of the NES, you need to know which Modern Award covers your employees. Modern Awards outline the minimum pay and conditions that are payable for your employees.
Modern Awards apply to everyone within a particular industry except for some managers and some highly paid employees, or if an Enterprise Agreement covers a particular workplace.
It is always best to assume your workers are covered and work backwards from that assumption. This means doing a bit of digging to find the right Award that covers your team.
If someone signs a contract with you, they cannot legally be worse off under that contract than under the terms of their Award.
Of course, you can pay more than the minimum rates, but you still need to ensure you meet all other provisions of the Award, such as penalty rates and hours of work.
Stay up to date
Wages and conditions are regularly reviewed by the Fair Work Commission. It is up to you as the employer to monitor the relevant Awards for your team members and adjust the payroll system as required. Missing an update is no excuse for not meeting your employer obligations under the law.
Five actions for your business
Below are five ways to ensure you comply with the Fair Work provisions.
- Get a copy of the NES
- Review all your employees’ entitlements and conditions against the NES to ensure every person is being paid correctly
- Familiarise yourself with the Modern Award that covers your industry (or the Enterprise Agreement that covers your business)
- Review all your employees’ pay and entitlements against the Award (or Agreement) to ensure every person is being paid correctly
- Review all your employment contracts to ensure they are documented and signed, and meet all compliance requirements