Without question, the Fair Work Act and other legislation impacting the employment relationship can be difficult to navigate, particularly for smaller businesses and organisations with little internal professional HR support. And with fines for individual breaches of the Fair Work Act potentially exceeding $60,000, it’s little wonder that we end up supporting many clients looking to navigate these difficult waters and manage the associated risks.
We’ve been doing a fair bit of this work lately, and notice a few common issues arising. In this article, we focus on the challenge of determining applicable awards and classifications.
Determining Award Coverage
For most Australian workers, the majority of their terms and conditions of employment will governed by one of the 120 or so modern awards (available on the Fair Work website, click here).
Understanding which award (if any) covers each of your employees is a critical first step in terms of ensuring legislative compliance. Most employees will be covered by an award which is specific to a particular industry (eg. The General Retail Industry Award, the Restaurant Industry Award or the Building and Construction General On-Site Award). Be sure to review the Coverage and Definitions clauses, and Job Classifications, of possible awards that may apply, to determine if they do in fact apply to your workers.
If there does not appear to be an industry-specific award that applies, or if there is a specific industry award but it does not cover all of your workers (eg. it might cover your operations staff but not your admin staff), next consider if an occupation-related award such as the Clerks Private Sector Award might apply to all or some of your workers. Again, be sure to review the Coverage and Definitions clauses, and Job Classifications.
If you cannot find an industry or occupation that applies, consider whether the Miscellaneous Award might apply.
Tip: The Award Finder tool on the Fair Work website can also be helpful in determining which, if any, award applies – refer here.
If you complete all of these steps and cannot locate a suitable award for all or some of your workers (recognising that for some businesses/organisations multiple awards may apply to cover the full range of workers), and assuming that your industry/organisation does not have a registered agreement in place, it may be that some workers are “award free”. In this case, be aware that the National Minimum Wage, National Employment Standards and other legislation relevant to employment (eg. legislation governing superannuation and work health & safety) will still apply to these employees.
Determining Applicable Classifications for Award-Covered Employees
If you determine that there is in fact an award that applies to some or all of your workers, you need to ensure that you understand and apply the correct award classification to the role that each person is performing. This is key to ensuring that you are paying your workers in accordance with the applicable award.
All modern awards include a classification structure, the details of which are usually attached as Schedule B to the award (refer this example in the Clerks Private Sector Award). The schedule will generally outline the characteristics and typical/skills duties of a person engaged at each classification level. In some awards, the classification structure also includes examples of roles that typically apply to a given classification. You should review the classification structure in the relevant award for each employee and make a note of the appropriate classification. We generally also suggest that this be documented in the employee’s contract or offer letter and/or position description.
Once you have allocated a classification to each role, you can use the Pay Guide for the relevant award, or the Fair Work Pay Calculator to determine the minimum applicable rates of pay.
So there you have it – an answer to a couple of the most common questions we are asked by SME employers. If you have any feedback or need any support be sure to let me know ([email protected]).
Note that this article presents general information only and should not be considered formal or legal advice. If you think your business may be impacted by these issues, you should seek additional information/support, to ensure your specific circumstances are accounted for