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All Articles / Accounting and Bookkeeping
All Articles / Accounting and Bookkeeping

Paying above the award rate

Understanding award rates and penalties

Understanding award rates and penalties

Employers paying above the award don’t have to worry about penalties, right?


The law is … the law

In a recent case before the Western Australian Industrial Magistrates Court’s (the Court) Simone Jade Stewart v Next Residential Pty Ltd, otherwise known as ‘Stewart’s Case’, the court found that Ms Stewarts’s annualised salary of $78,000 failed to meet the requirements of the applicable award, in this case the Clerk’s Private Sector Award 2010.  The employer, Next residential,  argued that Ms Stewart’s contract stipulated and the intentions were clear that the annualised salary was inclusive of all the provisions set out and payable under the Clerks Award.  According to the signed contract, the annual salary was intended to be inclusive of “any award provisions/entitlements that may be payable under an award..”

It’s complex

In this case the employer had paid $31,000 above the highest classification in the applicable award (level 5), excluding any loadings, penalties or overtime that may be payable.  To many employers this would seem like reasonable compensation!

However, the conclusion of the court made it clear that general clauses within employment contracts that relate to annual salary provisions in the Clerks Award are not enough to satisfy the obligations imposed by the award.  Therefore, employers utilising the annual salary provisions of the Clerks Award (or another modern award that provides for annual salary provisions) need to be specific as to what monetary obligations are absorbed to minimise the risk of underpayment claims.

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