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Law

Changes to awards could mean you aren’t paying staff correctly

By Jack Campbell | |5 minute read

The Fair Work Commission is proposing to amend an employment award. These changes could spell confusion for companies and result in under, or even overpayment, of staff.

The Professional Employees Award 2020 can be confusing, and with introduced changes, even more so. The Fair Work Commission proposition would see four more roles covered under the award:

  • Engineering duties
  • Scientific duties
  • Information technology duties
  • Quality auditing

“Recent changes to the professionals award have complicated how to appropriately classify staff,” said NB Employment Law director Jonathan Mamaril.

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“Award coverage of an employee is typically determined by the principal purpose test, which requires a business owner or the HR team to examine the work performed by the employee and the circumstances of their employment.”

“Unfortunately, the principal purpose test is ill-suited for many businesses in determining whether an employee falls under the professionals award. As a result, many employers are left in limbo and are choosing to overpay employees to avoid potentially costly underpayment of wages claims in the future,” explained Mr Mamaril.

According to Mr Mamaril, the organisations most at risk of getting pay wrong are those that have been recently acquired or have merged with another company.

“Further complicating matters is the realisation some professions are award-free, while other[s] are not,” said Mr Mamaril.

“There are always issues around compliance, but they are heightened during acquisitions and mergers. Poor record keeping and a lack of due diligence often compounds the uncertainty of what to do and how much new staff should be paid.”

He continued: “Acquisitions and restructuring also prompt businesses to look back over their books. Most organisations use some form of automated payroll system, that while necessary for efficiency, can spell disaster if not set up correctly. If employers input the wrong classification, award or leave loading, the financial consequences can be considerable. What might have started with a small error can become an exponential problem.”

Companies such as Coles, David Jones, and Woolworths have all been caught out in the past for underpaying staff. These issues can be avoided by making sure you’re on top of the latest award information.

Mr Mamaril added: “If employers have the slightest inkling, they may be dealing with a wage discrepancy, it’s essential they engage a lawyer to do an audit.”

RELATED TERMS

Compliance

Compliance often refers to a company's and its workers' adherence to corporate rules, laws, and codes of conduct.

Jack Campbell

Jack Campbell

Jack is the editor at HR Leader.