Awards & Overtime Explained

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Awards and overtime - Introduction

Most business owners will at some point be forced to deal with ‘awards’ and more complex overtime and benefit accrual situations for their employees then they previously imagined. As a business scales and different employees are hired to fill newly created roles employers will be forced to pay multiple employees within their business according to different industrial awards despite the employer’s business falling within a specified industry. Example; In a manufacturing firm, office admin staff may fall under the Clerks award while the staff on the factory floor may fall under a manufacturing award.

Overtime nuances vary between awards which will dictate the basis on which overtime is paid. Unpaid and paid compulsory breaks will also be dictated by industrial awards.  

Does minimum wage vary between awards?

Yes, the minimum wage varies between industrial awards, each award lays out the minimum pay rates for employees of differing age and skill levels for example; a first-year office administrator must be paid at least $20.73 an hour under the clerk’s award and a junior at 19 years of age must be paid 80% of that amount.

Is overtime paid based on overtime hours worked during one day or over the week?

Your employee works 10 hours in one day but he is going to get a shorter day tomorrow, overall, he will not work over a 38-hour week, do you have to pay overtime on the 10-hour day?

This depends on the ordinary hours and overtime clause built into the award. If an employee falls under the clerk’s award MA000002 (As many admin officers etc. do) ordinary hours are a maximum of 10 hours a day and maximum 38 hours a week. This means if the employee worked for 10 hours in one day, they would not be entitled to overtime pay as long as they did not exceed their 38 hours for the week. In contrast, an employee covered by the manufacturing award MA000010 may be able to work up to 12-hour shifts without overtime pay so long as they do not exceed 38 hours a week.

Note: in many cases a 38-hour week can be averaged over 4 weeks among other averaging techniques specific to certain awards.

If I am on a salary am I entitled to overtime?

Under clause 7 of most awards in Australia there is the option for an individual flexibility arrangement which allows the employee and employer to come to an agreement on a salary which may have a built in compensation for expected overtime. Such arrangements must not disadvantage the employee compared to the standard award and must be a genuine attempt to satisfy both parties. If you have a written agreement with your employer which guarantees you a salary above award wages and may sometimes demand overtime hours that are not considered unreasonable you may not be entitled to extra overtime hours as your salary is already compensating you for them.

What breaks are employees entitled to?

As with most answers in this article this varies with the award; If your employee falls under the clerk’s award they will be entitled to a 30-60 min unpaid lunch break each day, to be taken within the first 5 hours of work and at least 1 paid 10-minute rest break to be counted as hours worked.

What if my employee does not fall under a specific award?

If your employee is not covered by a specific award they will be entitled to the national minimum wage and National employment standards

Do you need help with payroll, overtime and award classifications?

For payroll services in Wollongong, Sydney or Bowral contact CTK ACCOUNTING at ctkaccounting.com

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