Businesses should not underpay workers. We all know it. But how do you, as a business owner, know you’re paying the right rate?

Recently, a multinational cosmetic brand Lush was found to have miscalculate modern award entitlements which meant they significantly underpaid workers for over 8 years. Lush has been required to backpay almost 4.5 million worth of wages (see here for their current enforceable undertaking with the Fair Work Ombudsman).

The case is a good reminder to be vigilant in ensuring you understand all entitlements applicable to your workforce.

We’ve written out a little checklist for you in our blog here.  

1. Meet the National Employment Standards

The National Employment Standards (NES) are 10 minimum employment entitlements applicable to all employees.

The entitlements in the NES act as a ‘base safety net’. This means that entitlements set out in an Award, enterprise agreement or contract cannot exclude or provide less than the NES entitlements.

In summary, the NES provides entitlements on:

• Maximum weekly hours;
• Requests for flexible working arrangements;
• Parental leave and related entitlements;
• Annual leave;
• Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave;
• Community service leave;
• Long service leave;
• Public holidays;
• Notice of termination and redundancy pay;
• Fair Work Information Statement.

2. Meet any applicable Award, Enterprise Agreement or Contractual Entitlements

In addition to the NES entitlements – employees also gain entitlements from additional agreements – being:

1. An applicable modern award;
2. An applicable enterprise bargaining agreement (EBA); and
3. Their contract of employment.

What is an award?

Unlike the name would suggest, an award is the minimum or basic rate that an employer in your industry is allowed to pay for your kind of work. This means an ‘award’ will be different depending on whether you’re in construction, teaching, nursing, accounting, etc.

Questions you need to ask yourself:

• Are your employees covered under a Modern Award?
• If so, what award classification is each employee?
• According to their classification, and employment type (full time, part time, casual, shift worker etc.) what entitlements apply to them?

This is a complex area that requires interpretation – we recommend that you reach out to one of our expert consultants to determine obligations you have in your circumstances.

Is an Award the same as an Enterprise Bargaining Agreement (EBA)?

Though award rates and EBAs are related, they refer to different kinds of fair work regulation.

Where an award sets the ‘benchmark’ for terms and conditions of employment in a particular industry, an EBA is a negotiated document that generally aims for greater entitlements and conditions for workers.

This means that where there is an EBA that is inconsistent with an award, the conditions set out in the EBA will override the award to the extent of the inconsistency. An EBA will usually be the result of negotiations between employers and industry unions, who aim to advocate for better working conditions for employees above their award entitlements for particular reasons.

What are Some of the Main Award / EBA Entitlements?

To ensure that you’re paying the correct rate – here are some of the main items to ensure you understand in your applicable award or enterprise agreement:

• employment categories;
• classifications;
• minimum weekly wages;
•  junior rates;
• allowances;
• overtime and penalties;
• breaks;
• annual leave;
• personal/carer’s leave; and
• public holidays.

Conclusion

There are serious and costly consequences for employers who fail to ensure their employees are paid according to their entitlements. To save your business money and time down the track, it is vitally important that you ensure you meet all obligations when it comes to fair pay for all staff.

For more information on employee entitlements see our free ‘how to’ guides on:

• EBAs;
• Employee contracts; and
• Managing leave balances.

Need advice?

Understanding the effect of the Fair Work Act, enterprise agreements and/or awards on various pay and allowance entitlements in your business is complex, but the consequences of breaching fair work pay conditions can be costly.

At Workplace Wizards, our expert consultants can help you understand your obligations under the Fair Work Act, Enterprise Agreements and other registered contractual agreements, and assist you in meeting these obligations with minimal cost to your organisation.