It’s clear that there is confusion about the basics of wages and entitlements obligations amongst employees and employers (including large ones).

All adult employees from the lowliest clerk to the most senior CEO are required to be paid at least a minimum wage rate (currently $19.84 per hour) for ALL hours of work. This rate is established by an Expert Panel of the Fair Work Commission (FWC) pursuant to the Fair Work Act 2009 (Act) and is updated each year, usually from 1 July. All casual employees are entitled to a 25% loading. The National Employment Standards (NES) in the Fair Work Act also provide for minimum leave entitlements for all employees.

These minimum requirements are supplemented by the industrial award and enterprise agreement system. Industrial awards are made by the FWC under the Act and regulate minimum terms and conditions for specified industries and occupations. There is currently more than 100 industry or occupation awards that provide detailed regulation of minimum conditions for most jobs and industries. Awards can be accessed through the FWC – www.fwc.gov.au and the Fair Work Ombudsman (FWO) – www.fairwork.gov.au. Special rates can apply for juniors, trainees and apprentices.

Most managers and professionals (such as accountants and finance, legal, marketing, human resources, public relations and information technology) fall outside the award system and are known as “award free” occupations. However, even if there is no specific award that applies to a job, the Miscellaneous Award may apply where the job is not managerial or professional in nature. Awards commonly include minimum standard rates for different job classifications, overtime and penalty rates, casual rates, allowance payments and breaks requirements which must be observed by employers.

Sometimes, an employer will have an enterprise agreement (EA) which applies to some or all employees. These are agreements made between an employer and a group of employees under the Act and which have to be approved by the FWC. An EA takes the place of an applicable industrial award during its life. The EA sets rates of payment and conditions for employees (although minimum rates cannot fall under the relevant award) for the life of the EA (and continues in force past the nominal expiry date unless discharged or replaced by another EA).

Awards can allow for the payment of annualised wages in certain circumstances and it is possible for an over award annual wage to be paid outside the award system as long as there is appropriate contractual provision and employees are not paid any less than they would be entitled to overall under an award.

Award free professionals and managers are generally paid an annual salary (as distinct from a wage based on hourly rates) which is only subject to the national minimum wage and NES requirements.

Detailed hours of work records are required to be kept by employers for most award based employees and payslips must be issued to all employees within one working day of pay day.

Disputes about pay rates can be raised during employment including by use of the dispute mechanism in an award/EA. There is a general 6 year time limit on taking action to recover unpaid wages and entitlements.

The FWO can be a useful source of information and assistance both in calculating entitlements – see calculate.fairwork.gov.au – and facilitating a voluntary mediation with an employer if there is a claim of underpayment. If this does not succeed, then legal action may be necessary.

It is important to remember that any employment agreement is subject to any applicable overriding statutory/award/EA obligations.  Please contact us if you would like any further information or help.