As an employer, you must pay your employees at the correct rate, as well as any entitlements they are eligible for. This includes parental leave, sick leave or overtime rates.
The wages and entitlements your employee is eligible for can depend on:
The current minimum wage in Australia is $740.80 per week, which equates to a minimum hourly rate of $19.49. The minimum wage is the absolute lowest that an employee can be paid. This minimum wage was set on May 30, 2019 and must be adhered to by all businesses operating in Australia.
Understanding minimum wages in Australia is one of the most important elements to maintaining an effective cost structure when running a business. There are certain standards set in place by the Fair Work Commission which dictates minimum grades of pay for different job roles across all industries, and if you aren’t fully aware of each of your employees’ minimum wages, you could find yourself underpaying them.
However, when it comes to working out what your employees’ minimum wages are, you also need to factor in their minimum entitlements under the relevant Award or Agreement. These entitlements are differentiated across a variety of factors such as industry, job type, experience in the role, etc and hold potential repercussions if they are not met. So it is important that employers understand minimum entitlements.
To help you work out what you need to pay your employees, the Fair Work Ombudsman (FWO) has created a Pay Calculator. You can use this online tool to calculate modern award pay rates for your employees, including:
Employers should also know that if they have employees who are not covered by an Award or Agreement, they will have their wage set by the National Minimum Wage Order.
If an employer would like to pay above the minimum wage rate, both the employer and employee/s need to be aware of any increases to the award wage each year when the Fair Work Commission release adjustments.
This is important because as long as the employee is being paid above the award wage, the employer does not need to increase the employee/s’ wages on 1 July because the base requirement is already being met. However, when the time comes that the employee’s wage is less than the base wage, the wages paid must increase to at least the minimum wage.
While most employees in Australia are covered by Modern Awards, some are not. If you have employees who are not covered by a Modern Award then you need to understand what wages they are to be paid. The Fair Work Commission also adjusts the National Minimum Wage Order (the order) on an annual basis, and likewise any adjustment needs to be checked each year as it provides the base wage for employees who are not covered under a Modern Award or Enterprise Agreement. Any employees who are not covered under a Modern Award cannot be paid less than this wage order. What else needs to be added to the base rate of pay?
Employees often get higher rates when they work late nights, early mornings, weekends or public holidays. Penalty rates come from the Modern Award or Enterprise Agreement and they are different for each industry and job.
What is considered overtime is different under each Award or Agreement. Overtime is usually any work in excess of 38 hours a week, or outside the ordinary hours listed. Overtime is often paid at a higher wage (such as time and a half). Instead of being paid an overtime rate, an employee may be able to take time off instead. This is called time in lieu (TOIL). Employees who are not covered by an Award or Agreement will not be paid overtime unless their contract says they do.
Allowances are additional payments made to employees for a variety of reasons such as doing certain tasks, using certain skills, working under certain conditions or using personal tools at work. For example, an employer may decide to pay an employee an allowance using their own car to carry work materials or wearing a special uniform that requires cleaning. It’s important that you always check the relevant Award or Agreement for the specific employee because allowances in each industry will vary.
Being fully aware of Australia’s Minimum Wage order and wage rates within different industries is something that is vitally important to running a business.
Our team at Nobel Thomas can take the hassle out of understanding these minimum wage requirements and other entitlements for your industry. We can help make you aware of your obligations under the Fair Work Act and remain up to date on any legislative changes that will impact your business.
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