Importance of Updating and reviewing your company policies and procedures
Employee handbooks should be reviewed and updated at least on an annual basis, and an employer may want to consider reviewing the handbook every six months. While the core elements of policies and procedures may stay the same the details should change according to industry standards, organizational needs, or legal requirements. In addition, policies should line up with the company’s mission, vision, and values and these may change.
The REALITY is however that small business owners do not have the time to constantly update or amend the policies and procedures that they have in place. And it is not a legal requirement in Australia. BUT as an employer, you have a legal responsibility to inform your employees of their rights and responsibilities even if there is no federal or state law that requires you to have an employee handbook.
BUT an employee handbook is a great way to induct new staff into your Company and give existing staff a document they can reference at any time to keep their knowledge of workplace policies and procedures up to scratch.
Writing an employee handbook from scratch is a big undertaking. You have to explain a lot of rules and guidelines in a way that is easy to understand yet detailed enough to get the full message across to your employees.
- Flexible working arrangements – 1st December 2019 affecting all modern awards – additional obligations in regard to arrangements and requested for flexible working. Flexible work is now a model term in all Modern Awards. Under the model term, employers must actually have a discussion with employees who make a request and try to come to a genuine agreement. The obligation to discuss did not exist under the Act. Employers must also provide a written response explaining any grounds for refusal of the request.
- Casual Conversion – October 2018 – many modern awards received a new clause that provided casual employees with an entitlement they did not have before. As of 1October 2018, ‘regular casual employees’ may request that their employment be converted to full time or part-time employment.
- Family and domestic violence leave – The Fair Work Amendment (Family and Domestic Violence Leave) Act 2018 took effect on 12 December 2018. The FW Act now includes the right for workers to take up to five days of unpaid family and domestic violence leave per year as part of the NES. This extends the right to all workers, beyond the coverage of the award system.
- Termination Payments – A new termination payment clause has been included in some modern awards. This clause imposes a requirement that on termination an employer must pay an employee’s outstanding wages and other entitlements no later than seven days after the day the employment was terminated. Common modern awards that now have this clause include:
- Clerks – Private Sector Award 2010;
- General Retail Industry Award 2010; and
- Banking, Finance, and Insurance Award 2010.
- First Aid Allowance – Clerks – Private Sector Award 2010– need to be paid the full weekly amount regardless of the hours that they work and not pro-rata.
- As of 1 January 2020, employers are required to pay superannuation on their employee’s gross pay. This also includes any salary they have sacrificed. Salary sacrifice arrangements will change from January 2020 and it’s important you let your affected employees know. It is now no longer possible for the employer to pay an employee on a salary sacrifice agreement on the reduced amount of super.
IMPORTANTLY on the 1st March this year (2020) there are a number of awards being affected by changes – you can read about it here (HERE) What happens if you do not comply??
The proposed new clauses will fall into one of three categories and have specific requirements:
- Category 1 – includes modern awards which cover employees who work relatively stable hours. The Commission determined that the annualized salary term for this category will not require an employee’s agreement to the introduction of an annualised salary arrangement. The employer may implement an annualized salary in this category without employee agreement;
- Category 2 – includes modern awards that cover employees who work highly variable hours and/or significant ordinary hours of work which attract a penalty rate. The Commission determined that the annualised salary term for Category 2 modern awards will require employers and employees to agree on the application of an annualized salary arrangement; and
- Category 3 – includes modern awards that currently provide that the annualized salary be an amount not less than a specified percentage above the minimum weekly wage set out in the modern award (e.g. 25% in the Restaurant Award). The FWC determined that the annualized salary term for Category 3 modern awards will require employers and employees to agree on the application of an annualized salary arrangement. The clause will only apply with respect to the non-managerial staff.
- As of 1 March 2020, employers are also required to pay employees for any overtime worked if their salary does not include overtime.
From 1 March 2020, if an employer discovers that an employee received less pay on their annual wage agreement than if they were paid under the award, it’s your responsibility to pay your employees the difference. This payment is required to be paid within 14 days and the process needs to be undertaken every year. This is also applicable upon the termination of contracts.
- Employers must now keep records of when their employees start and finish work, and when they take their breaks.
From 1 March 2020, a failure to comply will amount to a breach of a modern award—colloquially referred to by the media as “wage theft”—and will attract civil penalties under the Fair Work Act 2009 (Cth).
Need help to understand any of these requirements then give the team at Fresh HR Insights a call on 0452471960 or email email@example.com.
|Do you pay your employees an “all up amount” annualised salary?
For some awards there are significant changes on the way in 2020. Is your business ready?
As part of the four-yearly review of modern awards, the Fair Work Commission handed down a decision impacting annualised wage (salary) provisions in certain Awards. Are you ready?Read MORE HERE
New annualised salary award provisions will apply from 1 March 2020
As part of the four yearly review of modern awards, the Fair Work Commission (FWC) has recently handed down a decision which will impact employers paying annualised salaries to employees covered by a modern award with an annualised salary clause. The FWC decision on annualised salary award provisions finalises the terms of three new standard ‘annualised wage arrangement’ clauses, which will replace the existing annualised salary clauses in the 19 modern awards already containing an annualised salary clause. The new terms will also be inserted into three modern awards which have not previously had an annualised salary clause.
What is an annualised salary arrangement?
Annualised wage (or salary) arrangements are permitted under a number of awards and allow an employer to pay a fixed annual wage in satisfaction of various award entitlements, including minimum weekly wages, allowances, overtime, penalty rates and annual leave loading. Most of the existing annualized wage award provisions are relatively simple to apply and allow employers a reasonable degree of flexibility and convenience when managing remuneration arrangements.
What is changing with annualised salary award provisions?
The new award annualised wage provisions are in generally consistent terms but there are important differences and employers should carefully review the arrangements for each award covered employee in their business to ensure compliance. Key changes to the award annualised wage provisions include:
- An employer may pay a full-time employee an annualised wage in satisfaction of minimum weekly wages, allowances, overtime penalty rates, weekend and other penalty rates and annual leave loading;
- The employer must advise the employee in writing and keep a record of:
o the annualised wage to be paid;
o the provisions of the award to be satisfied by the annualised wage;
o the method by which the annualised wage is calculated, including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation;
o the outer limit number of ordinary hours which would attract payment of penalty rates under the award in a pay period or roster cycle; and
o the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle;
- If an employee works hours in excess of either of the outer limits specified above during a pay period or roster cycle, those hours are not covered by the annualised wage and must be paid separately in accordance with the applicable award provisions. That is, these amounts must be paid on top of the annualised wage;
- The annualised wage must not be less than the minimum amounts payable under the award for work performed over the year for which the annualised wage is paid;
- Each 12 months following the commencement of the annualised wage arrangement or upon termination of the employment, the employer must calculate remuneration payable under the award and compare it to the annualised wage actually paid to the employee. Any shortfall must be rectified by the employer within 14 days;
- The employer must keep a record of the start and finish times, including any unpaid breaks taken, for each employee who is party to an annualised wage arrangement. This record must be signed by the employee or acknowledged in writing as being correct during each pay period or roster cycle. An electronic acknowledgement will be acceptable; and
- The model award clause to be inserted into certain awards where employees typically work highly variable hours requires that the employee and employer agree to the annualised wage arrangement (ie, employee consent is required) and allows either party to terminate the arrangement by giving the other 12 months’ written notice.
What should employers do to prepare for these changes?
We expect that many employers will find the new annualised wage arrangements difficult to implement and time-consuming to manage. Given this, employers should review the annualised wage provisions that will apply to your business from 1 March 2020 and start preparing for the introduction of the new arrangements or alternatively, seek advice about other compliant options.
What awards are affected by the new obligations?
Model Clause 1 will become the standard annualised wage arrangements clause for awards under which employees generally work relatively stable hours, namely the:
- Banking, Finance and Insurance Award 2010;
- Clerks – Private Sector Award 2010;
- Contract Call Centres Award 2010;
- Hydrocarbons Industry (Upstream) Award 2010;
- Legal Services Award 2010;
- Mining Industry Award 2010;
- Oil Refining and Manufacturing Award 2010 (clerical employees only);
- Salt Industry Award 2010;
- Telecommunications Services Award 2010;
- Water Industry Award 2010; and
- Wool Storage, Sampling and Testing Award 2010.
Model Clause 3 will become the standard annualised wage arrangements clause for awards under which employees work highly variable hours or significant ordinary hours which attract penalty rates under the award, namely the:
- Broadcasting and Recorded Entertainment Award 2010;
- Local Government Industry Award 2010;
- Manufacturing and Associated Industries and Occupations Award 2010;
- Oil Refining and Manufacturing Award 2010 (non-clerical employees);
- Pharmacy Industry Award 2010;
- Rail Industry Award 2010;
- Pastoral Award 2010; and
- Horticultural Award 2010.
The FWC has deferred the insertion of:
- Model Clause 3 in the Health Professionals and Support Services Award 2010 for supervisory and managerial staff; and
- Model Clause 4 in the Restaurant Industry Award 2010, the Marine Towage Award 2010 and the Hospitality Industry (General) Award 2010 in respect of non-managerial staff,
as it further considers these changes. A new operative date for these changes will be determined later.
You can contact us if you have any questions.
New annualised salary obligations coming into effect from 1st March 2020?
Will you be ready?
The Fair Work Commission (FWC) have introduced three new annualised salary obligations clauses, as part of their four-year review. Each of the clauses were created to represent the work patterns and habits relative to each industry, and then allocated to each of the 22 modern awards affected. If you identify with any one of these awards, then now is the time to start examining your agreements both new and old, to ensure you are ready for the change’s effective 1st March 2020.
The clauses incorporate significant changes with the annualised salary obligations including but not limited to:
- New written requirements incorporating notification of how the salary was calculated, noting weekly hours of work and relevant award obligations, and in some cases setting limits on maximum hours included in remuneration (with additional payments required if exceeded);
- New record keeping requirements. It is now compulsory for all salary employees to keep signed accurate time and attendance records including start time, finish time and unpaid meal breaks taken;
- New wage reconciliation requirements. Every 12 months a reconciliation must be conducted using the time sheets and based on the award payment due, if they were paid as per the award. If a shortfall is identified between what was paid and what the award would have paid, then this must be paid to the employee;
- In addition, a year to date reconciliation must also be completed upon termination with any underpayments to be paid within 14 days;
Employers need to ensure that they have the infrastructure in place to comply with the new record keeping requirements, wage reconciliation process, and managing remuneration for overtime payments if required.
The team at Fresh HR Insights are watching this changes carefully and will be in touch with our clients in due course for how it will impact them and the tools are have created to make this as easy as possible. If you are not a client of ours and need some support please email us on firstname.lastname@example.org
“Regular” casual employees covered by an award have a right to request that their employment be converted to permanent employment, following decisions by the Fair Work Commission (FWC) last year. A Full Bench of the FWC has now made some changes and clarified a few matters in another decision released earlier this month.
Who is a regular casual?
A regular casual is an employee who has over a calendar period of at least 12 months worked a pattern of hours on an ongoing basis and could perform the same work as a permanent employee without significant adjustment being required.
Such an employee can request a conversion to permanent employment, but must do so in writing. The employer can agree to or refuse the request, but can only refuse on “reasonable grounds” and after consultation with the employee.
What has been changed?
The FWC considered submissions from a wide range of parties, and its decision will make the following changes
- The 12-month eligibility period will become a rolling period, not a one-off, so the employee’s right to request conversion will remain continually exercisable.
- Casual employees who have worked an average 38 hours per week over the 12 months and are seeking conversion to full-time employment will now be required to have worked “equivalent full-time hours” over 12 months. This change is to allow for the fact that the employee may have taken periods of leave that could have reduced his/her average.
- An employer’s grounds for refusing a request must be “based on facts which are known or reasonably foreseeable” (eg that the job will not exist in 12 months’ time), not speculative or based on a general lack of certainty about future needs.
- The requirement that the employer and part-time employee agree in writing on the terms of employment (days, hours, start/finish times, breaks, overtime and notifying variations) have been clarified by standardising the provisions – in some awards, the employer was previously only required to “inform” the employee.
Three awards that previously did not have casual employment conversion clauses will now have a clause inserted.
Minimum engagement for casual and part-time employees
This decision also clarified the minimum engagement period for employees to mean that that they must be engaged and paid for at least two consecutive hours on each occasion that they are required to attend work. This means that an employee must be paid for at least two hours every time he/she is called in, which in turn that an employee called in twice on the same day must be paid for at least two hours each time. Previously an employee could be called in twice or more but only paid for two hours.
The FWC also made some other changes to minimum engagement period provisions in some specific awards.
4-yearly review of modern awards – part-time employment and casual employment  FWCFB 4695, 10 August 2018
More news on casuals
In another recent decision by a Full Bench of the Federal Court, a large number of employees currently described by employers as ‘casuals’ could in fact be permanent, thus removing any need to request permanent employment Read more here.
By Mike Toten on 21st Aug 2018
What type of employees do you need?
Employees Permanent Full-time Permanent Part-Time explained. The type of employees that you choose to meet your business requirements is a very important decision. Business owners need to be aware of the legal ramifications relating to each employee type and manage them accordingly and appropriately. Businesses should follow ‘best practice’ to reduce the costs, minimise legal exposure and develop an engaged workforce. A well-designed Recruitment Process and New Starter documents also goes a long way to ensure your processes and procedures are effective. This also help integrate new employees for the long haul and not just a passer bye.
Once any employee has been hired, they must be given the Fair Work Information sheet thereby ensuring the employer meets their obligations under the FWA.
Types of Employee’s
This is the most common employee relationship. These individuals are employed on an ongoing and full-time basis. There isn’t a formal definition of permanent full-time however, it is generally taken that they work a 38-hour week or longer. Under the Fair Work Act 2009 (FWA), if an employee is employed on a full-time basis but there has been no agreement of their ‘ordinary hours of work’, these can be considered to be 38 hours per week. When it comes to dismissal these workers generally have access to the complete range of legal remedies unless it is explicitly stated otherwise in their award. Damages awarded to a permanent employee would typically be higher than those awarded to a casual or fixed-term employee.
There is also no formal qualification of part-time hours, however, it is understood that they generally work less than 38 hours per week. They are different to casual employees in that they typically work the same hours each week. As defined by modern awards, they work ‘reasonably predictable’ or ‘constant’ weekly hours. When it comes to dismissal these workers generally have access to the complete range of legal remedies unless it explicitly states otherwise in their award. Damages awarded to a permanent employee would typically be higher than those awarded to a casual or fixed-term employee.
Deduction for Wages – the In’s and Out’s
We all know that it can be frustrating when you have an employee who you may have given an advance to, provided equipment to or where uniforms have not been returned on departure and you want to get it back BUT you need to know before you act what you can and cannot do.
HERES THE BASICS
An employer is prohibited from making any deduction from an employee’s wages without the employee’s specific authority and, even then, when this authority is obtained, such deduction can only be made for the purpose of paying a third party, for the benefit of the employee in accordance with the Fair Work Act.
The Fair Work Act provides that an employer may deduct an amount payable to an employee if:
- The deduction is authorised in writing by the employee and is principally for the employee’s benefit;
- The deduction is authorised by the employee in accordance with an Award or Enterprise Agreement; or
- The deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a Court.
Some examples of deductions from an employee’s wages by an employer that could breach the Fair Work Act include:
- Deductions to cover shortages from cash registers;
- Cost of training courses provided to an employee where the employee is directed to attend by the employer;
- Cost of a mobile telephone provided to the employee for work-related use;
- Cost of tools and equipment supplied to an employee for work purposes;
- Cost of damages to the employer’s assets (including motor vehicles);
- Cost of breakages or accidents; and
- Cost of an employee’s uniform
Knowing that you have someone there when you need them in times of turbulence.
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It is extremely important for employers to be aware of the national minimum wage rate. By law employees must be paid the minimum wage for difference kinds of jobs under relevant Industry Awards. It is okay to pay employees more than the minimum wage, however some employers are paying less which can come back to bite them. Many employers can become complacent or even unaware of the minimum requirements, and this can lead to unwanted problems for the business.
Finding the right award can be difficult and time consuming for many employers, however it is in their best interest to ensure employees are being paid the minimum award rate. The Industry Awards can be found on the Fair Work website under the industry in which you business is conducted. This can be confusing at times for employers to find the correct Award for a particular role. Yet, it would be in their best interest to seek further advice to ensure they are paying their employees correctly.
It should be noted that different pay rates apply to casuals, who receive 25% loading on top of the minimum wage to make up for not receiving annual leave or personal and sick leave. Juniors, who are usually under the age of 21, will generally receive a lower wage which is calculated as a percentage of the relevant adult pay rate. Another important fact to remember is that employees must be paid correctly for all hours they work. This includes time spent training, in meetings, opening and closing the business and in some cases doing a trail shift.
Employers must be responsible for checking minimum wage rates on a yearly basis as each year the Fair Work Commission reviews the national minimum wage and pay rates under awards. The changes made will be published and begin from July, meaning that employers must pay their employees the correct wage from the first full pay period on or after 1st July.
There have been previous incidences where over a period of time employers have paid their employees below the minimum wage. Once this has been noted by the employee it has resulted in the business having to back pay. Being that it is generally a lump sum of money that is owed, it can be quite difficult for the employer, especially if running a small business, to acquire this money in a short period of time.
Overall, it is in the best interest of the business to continually check minimum wage rates to ensure every employee is being paid correctly. Whether they are full-time, part-time, casual or juniors, employers have a duty to ensure they are paying their employees correctly.
If you need help with your pay rates, awards or just want to get peace of mind that you are paying the right amount – contact us today
Problems with set-off clauses for Award-Covered Employees
Only last week I was speaking about Basic HR Management to business owners in Brisbane about this particular topic. I feel it is, therefore, important to post here.
Case Law: Simone Jade Stewart v Next Residential Pty Ltd (2016)
Having an employment contract did not prevent a former employee from claiming payments for additional hours worked because the contract failed to clearly express which entitlements were included in her annual salary.
As an administration coordinator, Ms Stewart was employed by Next Residential Pty Ltd (Next Residential) with an annual salary of $78,000. Her employment was terminated in January 2016, and she lodged a claim of underpayments of $30,000.
Ms Stewart alleged that Next Residential had not paid her overtime and lunch breaks as required by the relevant award. The award, in this case, was the Clerks – Private Sector Award 2010 [MA000002].
Next Residential claimed any additional hours worked were not directed by the company; any additional hours worked were offset by early finishes, late starts and half days, and, as per her contract, she was paid an annual salary, which took into account additional hours worked. The contract stated “Your salary is inclusive of any award provisions/entitlements that may be payable under an award” and “Your remuneration takes [reasonable] additional hours of work into account and no further payment will be made for extra hours worked.”
The Clerks – Private Sector Award 2010 [MA000002] contains a clause permitting employers to pay employees an annualised salary in satisfaction of minimum weekly wages, allowances, overtime and penalty rates and annual leave loading. The clause states that the employer is required to inform the employee which specific provisions of the Award would be satisfied by the annual salary.
Ms Stewart argued her contract of employment did not identify the applicable Award and did not inform her of the Award provisions that were satisfied in the annual salary. Consequently, she claimed she was entitled to overtime hours worked and payment for work completed during her lunch break, amounting to $28,984.
Employers may pay employees an ‘all-inclusive rate’ that includes award entitlements, so long as this intention is clearly expressed in the contract of employment. However, under the Award relevant to Ms Stewart, not all entitlements may be included within an annualised salary, for example, meal breaks.
The Court found the contract created uncertainty and confusion by including “any” award provision under “an” award. The provision lacked specificity, and the parties were not alert to the applicable Award or the provisions which were to be included in the annualised salary. Further, the contract appeared to include entitlements in the annualised salary that, under the Award, could not be included.
As a result, the employment contract did not exclude Ms Stewart’s claim because the contract did not clearly indicate which entitlements were included in her annual salary.
Employers often include set-off provisions in employment contracts to provide one all-inclusive rate to satisfy all entitlements under an award or at law. You should review your employment contracts to;
- check whether there is a relevant award that applies;
- check the specific entitlements under that award that can be set off by providing an annual salary; and
- amend and reissue employment contracts where this is not clear, or send out a letter to employees clarifying this.
Specific award entitlements should be included as a minimum and be as specific as possible.
Need help to review your contracts – call us on 1300 332 322.
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Working on public holidays
Employees get paid at least their base pay rate for all hours worked on a public holiday.
Awards, enterprise agreements and other registered agreements can provide entitlements for working public holidays, including:
- extra pay (eg. public holiday rates)
- an extra day off or extra annual leave
- minimum shift lengths on public holidays
- agreeing to substitute a public holiday for another day.
Leave Loading – what is it ??
The 17.5% leave loading is a wonderful historic legacy from the glory days of the Labour movement. The theory is when you are on holiday, you don’t have the opportunity to work overtime or do other things that might give you a bit extra in your pay packet each week. The 17.5% extra represents the extra earnings that you didn’t get the chance to earn. Of course, for people who work in most salaried jobs, there isn’t any overtime anyway, so the whole thing is faintly bizzare. This condition is a common feature of modern awards. The source of entitlement to annual leave loading when an employee proceeds on annual leave is usually the employee’s applicable relevant award or agreement or their individual contract of employment.
While you’re on leave, your rate of pay will be 117.5% of your normal rate of pay. So if your normal rate of pay is $2043.50 pf, your leave rate will be $2401.11 p