There is often a misconception that paying above award rates guarantees compliance. While offering competitive wages is an excellent practice, it’s just one piece of the puzzle. In this blog, we’ll delve into the intricacies of payroll compliance, exploring why paying above award rates doesn’t always suffice.
Employment Agreements
While offering above award rates can attract and retain top talent, it’s imperative to accompany this with well-structured employment agreements. Employment agreements serve as the foundation of the employment relationship, delineating the terms, conditions, and expectations for both employers and employees.
To ensure compliance, these agreements must align with Australian employment laws and regulations. Without legally sound employment agreements, even paying higher than award rates may lead to disputes and non-compliance issues, which can have far-reaching consequences.
National Employment Standards (NES)
The National Employment Standards, or NES, represent the core of employment regulation in Australia. They encompass fundamental entitlements, including minimum wages, leave entitlements, and termination notice requirements.
Paying above award rates does not exempt employers from the obligation to comply with the NES. It’s vital to thoroughly understand and adhere to these standards, regardless of the competitive wage rates offered, to maintain full compliance with Australian employment laws.
Superannuation contributions
Superannuation is a cornerstone, requiring employers to contribute a minimum percentage of their employees’ earnings to a designated superannuation fund. Even if your employees receive wages above award rates, you must fulfil this obligation. Superannuation contributions are calculated based on actual earnings, making it essential to ensure that you comply with these requirements to avoid legal repercussions.
Record-keeping and reporting
Effective record-keeping is fundamental for demonstrating compliance with employment laws. Employers must maintain comprehensive and accurate records, including hours worked, wages paid, and other relevant employment information.
Neglecting to maintain meticulous records can result in non-compliance, regardless of the wage rates being paid. Accurate record-keeping not only helps you adhere to regulations but also serves as essential documentation in the event of audits or disputes.
Overtime and penalty rates
Many industry awards in Australia specify overtime and penalty rates for various scenarios, such as working on weekends, during evenings, or on public holidays. Paying above award rates for standard working hours does not necessarily cover these additional payments. Maintaining compliance requires meticulous attention to detail, ensuring that employees receive the correct overtime and penalty rates as dictated by their relevant awards.
To illustrate this point, consider a scenario where a business pays its employees well above the award rate for standard working hours but neglects to compensate them with penalty rates for overtime worked during weekends. Despite offering a competitive wage, this practice would still constitute non-compliance and could lead to legal consequences.
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Workstem is a one-stop HR & payroll platform that can streamline payroll management for both employers and employees. We integrate rostering, attendance, leave and payroll, with the AI engine, all payroll-related data will be processed in one database and then auto-calculate the overtime pay according to different rates.
Workstem helps automate record-keeping, track hours worked, calculate payment and stay in compliance. By using Workstem, you can simplify the process of managing payroll and improve transparency in your workplace.
Workstem has industry experts to help the software implementation and training. With Workstem, no matter your people are full-time, part-time or casual, no matter they’re under what award, even EA, we can handle all automatically!
