Given that the majority of employees in Australia are covered by an award or agreement, employers need to understand which award coverage (if any) is applicable to their workforce as a critical first step in ensuring compliance.
Most employees will be covered by an award or agreement which is specific to industry (i.e., the Restaurant Industry Award or the Building and Construction General On-Site Award) or occupation (i.e., Nurses Award and Aircraft Cabin Crew Award). Furthermore, within the award or agreement are different classification levels based on the responsibilities within the role.
Determining the correct classification level is key to ensuring workers are being paid in accordance with the applicable award or agreement. Not only can employers face consequences for paying workers incorrectly, but may also be subject to penalties when failing to provide a classification level for employees who are covered by an award or agreement.
This is especially important for employers who pay workers the award rate, as there is no wiggle room to allow for errors if the pay rate is calculated incorrectly.
What are classification levels?
Job classification levels are set according to what is required of an employee in a role. Factors such as qualifications, skills, job knowledge and responsibilities are key in determining classification levels. Classifications are also vital to work out an employee’s rate of pay, the duties workers can be expected to perform, and what employees are required to do to move up classification levels.
Although classification levels have been developed to take into account the wide-ranging nature of work across roles as much as possible, the broad conditions within which responsibilities and duties are performed require a level of interpretation from employers.
A good point to remember is that classifications should be determined according to the highest function performed on a regular basis with regards to the role requirements, as opposed to the employee themselves. In addition, some awards may include examples of roles that typically apply to different classifications, which employers canrefer to.
Employers should carefully review the different classification levels in the applicable award for each employee and make a note of the appropriate classification. It’s also worth considering documenting the relevant classification in the employee contract, offer letter and position description.
What if I can’t find an applicable award coverage and classification?
Determining the award coverage and classification can sometimes become difficult if an employee’s duties do not fall squarely within a single award or classification level. This is because as much as they try, awards aren’t able to account for every single possible scenario that may arise.
If an employer is unable to find the right classification for an employee, there is sometimes a decision that needs to be made by the business to determine the most appropriate classification level in consideration of the employee’s duties and responsibilities.
Some employers and employees will not be covered by an award or agreement. When an employee is not covered by an award of agreement, they are considered to be award and agreement free. In these situations, the National Minimum Wage and the National Employment Standards will form the minimum terms and conditions of employment.
To break it down, here are 4 simple steps that employers can follow when tackling employee award coverage and classification:
1. Work out whether a modern award or enterprise agreement is applicable to the employee’s employment.
2. Look at the employee’s duties and responsibilities, and then compare those to the different classification levels under the relevant award or agreement.
3. Determine if an employee falls within the classifications set out in the relevant award or agreement and if not, consider if:
- another modern award or enterprise agreement is more applicable;
- the employee will be award or agreement free; or
- a decision will be made with regard to the appropriate classification level, in line with the National Minimum Wage, National Employment Standards and other legislation relevant to employment.
4. Ensure that the employee is notified in writing of their classification level, if required by the relevant award or agreement.
Need assistance determining which award and classification your employees should be covered by, get in touch with our highly skilled team of HR professionals.
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