The Situation/Problem

A common enquiry from AGHA members to the HR Advisory Service relates to what is the correct rate of pay to pay an award covered employee. In consideration of this enquiry we detail here a familiar scenario which will assist AGHA members to understand what the process is of determining what correct rate of pay applies to a particular employee. Before determining the right pay rate that applies to an employee an employer must be confident in knowing what is the role and indicative tasks of the particular employee so they can be classified accurately under a relevant award.

In this case the employee is an adult shop assistant working in a gift shop in a retail environment. This employee has the responsibility of serving customers, counting the till and opening and closing the shop. This employee works alone in the shop and does not have the responsibility of supervising staff, but reports to a manager or owner of the business.

 

Action/Recommendation

Now that we understand what the role is and indicative tasks of the employee we now have to determine what the correct award rate is for this employee and how do we find it? It is important to understand that the relevant award rate is only a minimum rate of pay for an employee doing a particular type of job and an employer can choose to pay above the minimum award rate if they so choose for various reasons like attracting and retaining staff.

This scenario indicates that the employee is working in a retail shop therefore it is logical and accurate to take a look at the classifications under the modern General Retail Industry Award 2010The classifications for this award are located under Schedule B and display a variety of classifications ranging from Retail Employee Level 1 to 8. An employer needs to review the classifications in the relevant award to decide which classification level the employee is best matched to. In this case, the employee is best classified as a Retail Employee Level 3 where the indicative tasks under this classification include;

  • Supervisory assistance to a designated section manager or team leader,
  • Opening and closing of premises and associated security,
  • Security of cash,
  • Designated second-in-charge to a service supervisor, or
  • Person employed alone, with responsibilities for the security and general running of a shop

Now that the employee is classified we have to link the appropriate rate of pay to this classification.

Minimum weekly wages for adults and juniors (generally under 21years) can be found in current modern awards. The modern award rate of pay for a Retail Employee Level 3 is $673.10 or $17.71 per hour for a permanent employee (applies only to 30/6/12). At this point, an employer must recognise that transitional minimum rates of pay also apply alongside modern award rates. Consequently, transitional rates must also be calculated as part of the process of determining the relevant current pay rate that applies for this employee. If the transitional rate of pay is higher than the modern award rate of pay then you must apply the transitional pay rate as the minimum.

The method for transitioning from pre-modern award rates to modern award rates for national system employers is explained under Schedule A of most modern awards. The transitional arrangements was introduced allowing employers trading prior to 26 March 2006 to phase in the modern minimum wages, penalties and loadings over five annual installments at 20% per year. This transitional option is available to employers to alleviate any immediate impact of the monetary increases and changes between the relevant pre-modern and modern awards.

Due to the complex nature of calculating transitional minimum pay rates, a preliminary explanation is detailed in the AGHA fact sheet Understanding the modern award Transitional Arrangements with further assistance offered from the HR Advisory Service team to assist AGHA members to calculate transitional minimum pay rates.

 

Result

The employer in this case was able to apply the correct wage rate for his employee and has become a little more acquainted with understanding the importance of applying the correct wage to avoid underpayment situations.

For more assistance, contact:

AGHA HR Advisory Service

Phone: 1300 315 355

Fax: 02 8448 3299

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.