Business Records: Why employee breaks are hurting Australian companies
Breaks are extremely important in running a business for a number of reasons. Taking a break at or between work whether it be to grab a coffee, a walk around the block or for lunch has proven to reduce stress, reduce injury risk, improve sustained attention, and increase motivation.
Although break times represent a small portion of a shift, break entitlements have caused some large issues for some of Australia’s leading businesses. Two of the biggest companies in the country have recently been involved in court cases centred around employees not taking a 10 minute rest break when entitled to, leading to accusations of underpayments well over $100 million.
Modern awards generally contain specific break requirements for different types of employees based on the amount of hours worked per shift or day. By law, employers are required to ensure these requirements are met and employees receive the correct break time. It is also vital that businesses record information about breaks in their business records and are able to prove that the employee had a break and when it occurred.
Different types of breaks
There are a number of different breaks that employees may be entitled to during their shift or between shifts. Break clauses in awards will vary and it is important that an employee receives the correct break entitlements as described in the award or agreement applicable to them to avoid any underpayments or overpayments.
Meal breaks are usually between 30-60 minutes and are generally unpaid. This gives the employee enough time to have something to eat and have a rest.
Depending on the award, employees may be entitled to multiple breaks based on how many hours they work in a shift. For example, under the Fast Food Award, employees are entitled to one 30-60 minute unpaid meal break if they work between 5-9 hours. They are then entitled to a second 30-60 minute unpaid meal break if they work longer than 9 hours.
Some awards may also include clauses entitling employees to penalty rates if they do not take the required break/s during their shift, however the rules and rates vary depending on the agreement.
Rest breaks (also referred to as ‘crib breaks’, ‘rest pauses’ or ‘tea breaks’) are generally shorter in time and consist of 10-20minute breaks allowing an employee the chance to take a quick rest, when employees are entitled to these breaks varies between the awards.
An example of rest breaks are contained In the Clerks Award, where employees are entitled to one 10-minute paid rest break between 3-8 hours worked or two 10-minute paid rest breaks if more than 8 hours is worked.
Breaks between work periods
Some awards also require that employees have a minimum break between two shifts on following days. For example, in the Retail Award, an employee must have a minimum break of 12-hours between when the employee finishes work on one day and starts work the next day. If the employee begins work within the 12-hour break, they are entitled to a rate of 200% until the employee has a break of 12 consecutive hours.
Why are breaks causing issues for Australian companies?
Two of Australia’s most well known and well-resourced companies have been reported for depriving their employees of their 10 minute paid rest breaks.
Both the Fast Food Award and the Clerks Award include a clause entitling employees to a 10-minute paid rest-break, so if the employee fails to take those breaks the company is receiving 10-minutes of free labour. It comes across as a small amount, but with thousands of employees all missing breaks, the total underpayments can get quite high.
An important point to make is that even if the employee did have the break but it wasn’t recorded, there is no evidence to prove that the break actually occurred. So when a review or an investigation occurs it would seem as if the breaks were never taken, even if they were.
Breaks in business records
The failure to keep and maintain proper business records relating to breaks can result in significant discrepancies. Whilst employees may be taking their required breaks, sometimes businesses do not have adequate records to prove it
An employee may have received a 30-minute meal break and it was recorded that they had one, but there was no record when the break occurred during the shift. If the break occurred during overtime hours then entitlements paid to the employee will differ compared to if the break occurred during ordinary hours.
These seemingly small errors in business records and internal processes can have a huge impact on employee pay, and as we have seen, can lead to giant underpayments in well-resourced companies. Hence making it even more important for businesses to understand employee break entitlements but just as important that they also record all breaks that occur.
PaidRight (https://www.paidright.io/) is currently undertaking some research to develop some new tools aimed at supporting Payroll and Finance teams. These tools will help Australian businesses understand and interpret the award they work with so they can have confidence that they’re paying their employees correctly.
To develop the product, we’re speaking with people in finance and payroll teams to understand current processes, pain points and opportunities for improvement within existing processes and systems related to pay. In exchange for your participation, we’ll donate $150 to a charity of your choice.