Modern awards have covered most workplaces from 1 January 2010. A common misconception is that paying above award rates will automatically release an employer from compliance with award obligations. Unfortunately, it is not that simple.
Awards govern more conditions than just pay rates, for example, rostering arrangements, allowances, and shift penalties. An employer needs to take positive steps to comply with, vary, or exclude the operation of these and other award conditions.
A breach of award conditions can attract civil penalties of up to $33,000 for a corporate employer and individuals involved can also be penalised up to $6600 for each breach.
Off-setting arrangements
As a general principle, over-award payments can only satisfy entitlements to which the payment is directed. For example, paying a higher hourly rate than the modern award rate of pay will not necessarily off-set penalties or loadings in the modern award, unless it is clear that the parties intended it to do so.
In view of this, a good starting point is to include a ‘set-off’ clause in your employment contracts.
Individual Flexibility Arrangements
This type of clause can be complemented by entering into an Individual Flexibility Arrangement with a particular employee in order to vary the effect of the application of certain terms of the award (e.g. overtime, allowances, loading).
Whether you are an employer or employee, Everingham Solomons will be more than happy to assist you with any employment queries because Helping You is Our Business.
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