Why are Australian Retailers struggling for payroll compliance?
The award system in Australia is complex. Many of the clauses within these awards have a number of potential interpretations and this can cause uncertainty around compliance.
There are more than twenty five areas where different interpretation decisions could be made when calculating pay under the General Retail Industry Award (GRIA), and as a result, companies may interpret key clauses very differently to one another.
The clauses below are some of the more intricate areas within the GRIA and where we see disparity in interpretation. The six clauses below give an insight into the complex nature of interpretation and also demonstrates why payroll compliance can be a real challenge for many Australian retailers.
#1 Clause 15.8 – Regular Sunday Workers
“The employer must roster an employee who regularly works Sundays in such a way that they have three consecutive days off (including Saturday and Sunday) per four week cycle.”
Employees that are regular Sunday workers are entitled to three consecutive days off (including Saturday and Sunday) per four week cycle.
The appropriate method for classifying ‘regular Sunday workers’ is unclear. Should this be determined by the employee contract, or the observed work pattern.
If the classification is determined, and a regular Sunday worker fails to take their entitled three days off work including a weekend, they are entitled to overtime. Which creates an additional calculation challenge in determining which additional day(s) should attract overtime.
#2 Clause 19.9 – Cold Work Allowance
“Clause 19.9 applies to an employee who is principally employed on any day to enter cold chambers or to stock or refill refrigerated storages such as dairy cases or freezer cabinets.
An employer is entitled to pay a $0.30/hr allowance to any employee working in a cold chamber above zero degrees. However, if the temperature is below zero, an employee is entitled to a pay rate of $0.76/hr. The challenge here is to determine the logic to define the logic to determine if the employee is ‘principally employed’ in cold chamber work, and the appropriate temperature based penalty. Is this determined by the employees contract or a logic using the observed work pattern.
#3 Clause 15.7(d) – Consecutive Days Off
“15.7(d) – The employer must roster an employee to work ordinary hours in such a way that they have two consecutive days off per week or three consecutive days off per two week cycle.”
Not rostering an employee the correct consecutive days off would result in a non-compliant pay period and the employee may then be entitled to overtime.
The challenge for employers is determining which days should then be counted as ‘overtime days’. Is it the last 2 or 3 days of the two week cycle or the first day back from a day off? Or is there another logic to this interpretation?
#4 Clause 16.3 – Breaks
“Clause 16.3 – The timing of rest and meal breaks and their duration are to be included in the roster and are subject to the roster provisions of this award.”
Unpaid breaks typically account for about 4% of recorded time. The timing of the unpaid break may impact entitlements due to different levels of pay throughout a single shift. When the time of the break is not recorded, employers will tend to overpay entitlements.
For example, pay rates increase after 6:00pm on weekdays so if the break occurs after 6:00pm but the employer deducts the break time from ordinary hours, the total pay for that employee will be higher than required.
If there is a record of a break taken, but not the time when it was taken, what is the appropriate assumption when calculating someone’s pay?
#5 Clause 15.4/15.5 – Ordinary Hours
“15.4 – Subject to clause 15.5, the maximum number of ordinary hours that can be worked on any day is 9.
“15.5 – An employer may roster an employee to work up to 11 ordinary hours on one day per week.”
Many businesses have employees working longer shifts. To calculate their pay, this clause indicates that we pay a maximum of 11 hours at the ordinary rate on one day, and a maximum of 9 hours at the ordinary rate every other day in a week
If an employee works more than 9 hours twice or three times in a week, it becomes unclear to employers which day becomes the ‘11 hour’ overtime day. With Sunday’s overtime rate being different to the rest of the week, the choice of the ‘11-hour day’ can make a difference to the overtime calculation.
#6 Clause 28.3 – Additional Paid Annual Leave
“For an employee other than a shift worker the additional payment is the greater of:
17.5% of the employee’s minimum hourly rate for all ordinary hours of work in the period; or
The employee’s minimum hourly rate for all ordinary hours of work in the period inclusive of penalty rates.”
Employees are entitled to annual leave loading payments equal to the greater of 17.5% of their minimum hourly rate, or the penalty entitlements they would have received if their ordinary hours include weekends or evenings.
Many employees have rosters that change through the year, making it difficult to identify the correct roster when calculating leave loading entitlements.
It can be challenging for employers when trying to calculate annual leave for employees with changing rosters. Do you base minimum hourly rate + penalties on the last roster cycle or an average over time?