Managing Staff – “What Exactly Does ‘Pay & Conditions’ Mean in Employment?

A frequently-asked question when it comes to managing staff is: “We always hear about following the law in terms of ‘pay & conditions’ but what exactly are ‘pay & conditions’ and where does the law fit in?”

The following is a handy summary of the main areas pay and conditions cover, plus key points for you to consider.

PAY – Paying employees covers the following areas:

* Payment of ordinary wages and salary, as required by legislative minimum standards, award, agreement and individual contract provisions

* Overtime payments

* Shift loadings and allowances

* Other allowances, such as first-aid, travel, entertainment

* Salary packaging – providing other benefits as components of the overall remuneration package

* Deduction of income tax from employees’ pay

* Other deductions from pay as authorised by employees

* Bonuses, commissions and other incentive payments

* Carrying out garnishee orders – where a court orders deductions from an employee’s pay to be made to the party that obtained the court order

* Providing pay slips to employees setting out full details of pay and deductions (including tax)

* Maintenance of payroll records in compliance with legislation.

CONDITIONS – ‘Conditions’ refers to conditions of employment and employees’ entitlements. The broad areas covered include the following:

* Hours of work – covers full-time versus part-time employment, casual employment, ordinary working hours, overtime, hours that are not standard (such as weekend or evening work or working on public holidays), shift work, fixed-term/fixed-project contracts, flexible working hours, scheduled days off, meal breaks, rest times, stand-by/call-back provisions, travelling time to/from jobs.

* Leave – includes annual leave, personal/carer’s leave, unpaid carer’s leave, compassionate leave, unpaid parental leave (includes maternity, paternity and adoption leave) long service leave and defence force service leave, all of which are basic entitlements that are available to all employees who qualify for them. Other forms of leave that employers commonly provide to employees include study leave, emergency service leave, cultural/ceremonial leave and leave without pay.

* Public holidays – employees are entitled to Gazetted public holidays. If the employer requires them to work on those days, they may be entitled to payment of penalty rates and/or other benefits (such as time off in lieu at a later date).

Key Points to Remember About Pay and Conditions

Be Proactive: Meeting obligations in relation to employees’ pay, employment conditions, conduct and job performance firstly involves complying with all the legal requirements that apply in these areas. However, it also involves being proactive: providing a supportive workplace and work culture, attracting workers to your business in the first place, encouraging good employees to remain with your organisation and to act promptly if problems arise – so as to prevent or minimise adverse consequences.

Be Aware Of Legal Obligations: First step is to be fully aware of all the legal obligations you must meet. These cover the following areas: paying employees, working hours, leave entitlements, holidays, hours of work, etc. Study the documents that affect these areas – legislation, awards and agreements, individual employment contracts and organisation policies/procedures – and set up a compliance system that ensures that you continue to comply and are able to stay abreast of any changes that occur, such as new legislation and case law.

Policies and Procedures: Many aspects of employee conduct and performance are covered by workplace policies and procedures, such as day off roster policy, Work-Life Balance policy and Company Car policy. Prepare policies that cover the various issues in your business, back them up with procedures (which are steps for implementing the policies in a practical way) and make sure they are widely publicised, explained to employees, and that employees clearly understand them. Many employers refer to these policies and procedures in employment contracts. However, to reduce the risk of a breach of contract claim, you should avoid making them terms of the contract. Very small businesses may regard putting a bunch of policies together as onerous and unnecessary. However, court cases have held that even the smallest businesses should have policies in place. If you are not sure which policies are appropriate for your business, you should seek advice.

Get Market Rates on Pay: To ensure you remain competitive as an employer, survey the pay rates and other conditions offered by rival firms in your industry or locality. Surveys are commercially available from sources such as employer organisations and recruitment agencies/consultants, or you can make informal ‘information exchange’ arrangements with other employers. In return, you should be willing to participate in surveys and provide data on your organisation’s own pay rates and conditions.