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Flat rates of pay cause headaches for businesses, large and small

August 5, 2016

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Do you operate in the fast food or retail sectors? Do you pay your employees a flat rate of pay? Bad news – the Fair Work Ombudsman has you in their sights.

A number of recent investigations and random audits have proved hugely successful. Indeed, the FWO has been targeting anyone and everyone, from large national organisations right down to small mum and dad operators. This includes a national high-end clothing retailer who was ordered to back pay employees in Sydney, Melbourne, Brisbane and Adelaide more than $162,000, and the operators of two fish and chip shops in the Newcastle region of NSW who were ordered to back pay workers almost $40,000.

The underpayments in both of these cases were the result of a decision to pay workers a ‘flat rate of pay’ for all hours worked; rather than the penalty rates, allowances and overtime rates applicable under the Award. This is hardly surprising. A recent national FWO campaign specifically targeting take-away fast food businesses recovered more than $582,410, with non-compliant minimum rates of pay identified as the most prevalent factor.

While it is perfectly legal to pay your workers a single, flat rate of pay, you must ensure that this rate is sufficient to offset all minimum rates of pay and entitlements under the Award; including applicable penalty rates, overtime rates, allowances and loadings. This can make compliance tricky, especially when Australia’s workplace relations system is so complex! It certainly comes as no surprise to us that businesses frequently come unstuck.

How we can help:

As an HR Assured client, you will have access to Pay Guides which simplify the complex Award system by clearly identifying the minimum rates of pay that will apply, depending on the days and times that a person works. You will also have 24/7 access to our Telephone Advisory Service, staffed by a team of highly qualified, highly experienced human resources and industrial relations consultants to answer any queries and ensure that you are meeting your minimum obligations.

For more information on the recommendations and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.