Employers regularly secure work by tendering for contracts on projects which include pricing for materials and labour. As part of the tender process, budget review process or throughout the life of a project, a head contractor will often confirm the rates being used and test the employer’s calculations to improve the value of the project. Difficulties often arise when employees are working shift work or overtime that attracts the attention of the head contractor.

Important tips when checking whether your rates are correct?

Generally, penalties for overtime and shift work are not cumulative. This means that an employee will not usually receive penalties for shift work when working overtime.

However, industrial instruments such as awards and enterprise agreements can deviate from this general rule. So, it is always important to check the exact terms of the industrial instruments that govern the employee.

For example, some awards don’t require employers to pay a shift penalty in addition to overtime for shift workers that work overtime. This may equate to a substantial cost saving for employers.

Similarly, some awards allow a casual to receive casual and night shift loading for their ordinary time only. This means that when a casual works overtime, overtime rates and casual loading will apply, however, night shift loading may not apply.  Again, depending on the specific industrial arrangements, this may create a substantial cost saying to employers.

It is important to check the awards and enterprise agreements to confirm:

• whether the rates of pay being provided to employees matches the award or the enterprise agreement; and
• whether the rates of pay which tenders are based matches the applicable award or enterprise agreement.

When should employers check for new rates?

The new financial year provides a good reminder to check employee pay rates. This is particularly important following the Annual Wage Review Decisions by the Fair Work Commission which can alter minimum Award rates and allowances. Details on this decision can be found here.

If you are unsure of the rates you are using in your tenders, if the head contractor is questioning the rates you are using, or you would like some assistance in calculating the rates please contact Ai Group’s Workplace Advice Service on 1300 55 66 77.

Alternatively, if you would like assistance conducting a survey in your business, please contact your local Ai Group Workplace lawyer in Sydney, Newcastle, Wollongong, Melbourne or Brisbane or email Ai Group Workplace Lawyers at info@aigroupworkplacelawyers.com.au.