Paying award ratesMarch 27, 2015
Paying award rates: the devil’s in the detail
Last week, we walked through how to find the right award. Now it’s time to tackle applying the award correctly. Working out the base pay rate is only the beginning. We often see businesses come unstuck when it comes to modifying that base rate. It’s a thorny problem: there’s a whole bundle of a factors that can come into play. So we’re going to untangle a few of those factors for you.
Have you updated your award?
Many awards have in-built yearly increases, which often take effect early in the new year. Then there are other awards with ad hoc variations, such as decisions flowing from Annual Wages Reviews.
Have you checked your awards data to make sure it’s up-to-date? And do you have the systems in place to be ready for the next increase?
How old is the employee?
Assuming we’ve got the right award data, we’ll launch into the pay variations spelt out in the award itself. We’ll start with a straightforward case. Several awards step out incremental pay increases, from 16 through to 21.
Let’s take Shelley as an example. Shelley’s 16 and works as a shelf-stacker at the IGA in Hughes. She’s covered by the General Retail Industry Award, which applies a percentage modifier to the base rate. Right now, Shelley gets paid 50% of the Award rate. When she turns 17, she should be paid 60%.
Although this seems straight forward, we’re still seeing some businesses not paying their juniors the right amount. And as we saw back in our first post on awards, that can leave you being forced to find many thousands of dollars in back-pay.
When do they work?
We’re all familiar with overtime, but there are plenty of other scenarios in which when someone works determines what they get paid. Let’s say Shelley gets asked to work on Anzac Day. Under the General Retail Industry Award, Hughes IGA will need to pay Shelley at double time and a half.
Are they filling in for someone else?
We love it when things get complicated. One common error comes up when businesses ask an employee to step up and fill in for someone else.
Robyn works at a Hyatt hotel as an assistant chef. The hotel is gearing up for their Christmas Day lunch. The night before Christmas, the head chef calls in sick, so it’s up to Robyn to finish pulling a feast together for over 200 guests.
It’s Christmas, so Robyn is looking forward to getting her public-holiday bonus pay. And Robyn has even more to look forward to. That multiplier should be applied to the rate for the job she was doing, not the assistant chef job she owned. Robyn should be paid at 2.5 times the chef’s rate.
Confused? There is hope
That’s quite an array of factors to keep in mind, and a large room for error. You can find award rates via Fairwork Australia’s website, or your industry association may publish rates. That’s less useful for managing scenarios like Robyn’s case, where different multipliers need to be applied together.
At easyEMPLOYER, the way we help businesses manage it all is by starting with a parallel pay run — one of our main diagnostic tools. We take the standard pay run, and compare it against a pay run where we’ve calculated all the correct award rates. When we compare the two outputs, we can see where there are errors, and drill down to get to the bottom of any variations.
If you want to run a quick health check on your HR system’s databases, the factors we’ve outlined here will get you started. If you want a comprehensive analysis, though, we recommend the parallel pay run approach.