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Are you paying the correct wages? 8 essential compliance tips

Updated: Oct 21, 2023

It's essential to get a handle on the legal nitty-gritty when it comes to employee wages. Knowing the right pay rates keeps you on the right side of the law and creates a fair and positive workplace. In this article, we'll dive into what you need to know when it comes to paying your employees in line with Australian legislation.

1 - National Minimum Wage

Alright, first things first—the Fair Work Act 2009 sets the National Minimum Wage, which applies to employees who aren't covered by specific awards or agreements. As of July 1, 2022, the current National Minimum Wage in Australia is $21.38 per hour or $812.60 per week (before tax). This is reviewed yearly and generally increased. You can find more information about it on the Fair Work Website.

2 - Modern Awards

Then, you've got Modern Awards. These are like rulebooks that outline minimum pay rates, conditions, and entitlements for different industries and occupations. We're talking over 100 Modern Awards out there, each tailored to a specific sector. Your job here is to figure out the right Modern Award that covers your industry and employees and make sure you play by the rules of that particular award. You can find the full list of Modern Awards here.

3 - Classifying your Employees

Within each Modern Award, employees fall into different classifications based on their roles, skills, and experience. These classifications come with specific pay rates, so it's crucial to classify your employees into the right category to determine their minimum wage entitlements.

4 - Penalty Rates

Now, let's talk about those penalty rates. When your employees work outside the regular hours—like weekends, public holidays, or overtime—penalty rates kick in. They're there to give a little extra compensation to those working at unsocial hours. Check out the applicable Modern Award to see how much extra you need to pay.

5 - Don’t Forget the Allowances

Some employees might be eligible for allowances in specific situations. For example, if they work in a hazardous environment or have to use special equipment, they might be entitled to extra cash. Take note of the allowances relevant to your industry and make sure you're giving what's due to those who qualify.

6 - Keep your Payroll Record in Check

Okay, here's some admin talk. It's important to keep accurate payroll records, not just for good housekeeping but also because it's a legal requirement. Track hours worked, leave taken, overtime, and other relevant details to show that you're following wage regulations to a tee (it also makes things MUCH easier if/when an employee claims you’ve been underpaying them..).

7 - If you think this is a problem for “Future Me”..

Think again! The Fair Work Ombudsman keeps an eye on wage compliance in Australia. I have worked with clients who have been ordered to pay thousands of dollars of underpayment (going back years) following an audit - all because they didn’t realise the pay rates had changed yearly. So, it's crucial to make sure you're playing fair and square. Penalties, fines, and legal headaches are no fun, so stay in the clear by doing things the right way.

8 - Keep Up with the Updates

Wage rates and conditions can change regularly. To avoid getting caught off guard, stay informed about any updates or amendments to the legislation that might affect your employees.

I get it—navigating wage legislation can be a bit of a maze, especially when you have unique situations or complex employee arrangements. If in doubt, reach out to me. I’m here to help you understand and comply with the rules.

When it comes to paying your employees, it's not just about fairness—it's about complying with the law and fostering a positive workplace. Familiarise yourself with the National Minimum Wage, Modern Awards, penalty rates, allowances, and other provisions in Australian legislation that apply to your industry.

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The content provided on this website serves as a general information resource on the subjects discussed, and should not be considered tailored to specific individual circumstances or a replacement for legal counsel. While we exert significant effort to ensure the accuracy of our information, HR Consulting TAS cannot ensure that all content on this website is consistently accurate, exhaustive, or current. Recommendations by HR Consulting TAS and any information acquired from this website should not be regarded as legal advice.

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