Employees Entitlements: It Pays to Know the Act

By Adam Foster

Further to our lead article for this edition of Directions on good governance in the Not-for-profit sector; the recent 7-Eleven scandal is an example of how damaging employee-entitlement errors can be for an employer. Thus making now a good time for employer organisations to take stock and ensure your organisation has covered off on all its obligations to employees.

Most employers are aware that section 61 of the Fair Work Act 2009 (Cth) sets out the 10 minimum standards for all employees. These include annual leave, sick leave and a Fair Work Information Sheet to be provided to new employees. In addition, section 16 of the Act clarifies that an employee’s base rate of pay is the rate set for any national system employee; that is, an employee covered by the Act.

Often the difficulty arises when employers discover that a Modern Award applies to their employees.

A Modern Award is a legislative instrument that provides additional employment terms to employees that work in a specific sector or industry; such as employees in the dry cleaning sector, or employees with similar work conditions such as administrative support staff. If it transpires that an employer is not paying their employees in accordance with the minimum Modern Award requirements, or the National Employment Standards, then an employer will be in breach of the Act. Breaches of the Act, such as underpaying wages, are an offence, that can result in a maximum fine of $10,200 per contravention for the employer. The sting in the tail for the particular contraventions is that the employer’s Directors and even Human Resources personnel can be liable for aiding and abetting the breach. What this means, is that Directors and Human Resources personnel can also be fined if it is deemed by the Court that they assisted the employer in breaching its obligations under the Act.

So, in addition to section 61, employees can avoid a knock at the door by the Fair Work Ombudsman by ensuring compliance with the Modern Award requirements. The best way to do this is to conduct a full audit of all your employee wages and conditions and make sure that they are in line with the current minimum employee standards. This avoids complaints made through the Ombudsman by disgruntled ex-employees and allows you to focus on driving your business forward.

If you require assistance in reviewing your employees’ employment conditions and whether they comply with a Modern Award, please contact Adam Foster (Associate, Business Law / Dispute Resolution) or Chris Morey (Director, Business Law / Dispute Resolution) on (03) 9629 9629.