Payroll Compliance

Why are Australian retailers struggling with payroll compliance?

August 12, 2021
0 min read
Payroll Compliance

The modern award system in Australia is complex. There are 122 awards, with many requiring an interpretation decision to determine the intention and meaning of the clause. This has led to ongoing uncertainty around payroll compliance, particularly in the retail industry.

There are more than twenty five areas in the General Retail Industry Award (GRIA) where different interpretation decisions must be made in order to calculate employees’ pay correctly.  As Due to the complex nature of these interpretation decisions,  companies may interpret key clauses very differently to each other, resulting in pay variances. 


The clauses below are some of the more intricate areas within the GRIA 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. This may be determined by the employee contract, or the observed work pattern.

If an employee is classified as a “regular Sunday worker” and fails to take their entitled three days off work, including a weekend, they are entitled to overtime rates.

The challenge is then determining which additional day(s) attract overtime rates. 



#2 Clause 19.9 – Cold Work Allowance

  1. 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.  
  2.  The employer must pay the employee an allowance of $0.32 per hour while so employed.
  3. If a cold chamber in which the employee is required to work is below 0°C, the employer must pay the employee an additional allowance of $0.50 per hour while so employed.



The challenge here is determining the meaning of an employee being ‘principally employed’ to work in a  cold chamber. Is “principally employed” determined by the employee’s contract or their observed work pattern. If it is decided the employee is “principally employed” to work in cold chambers, the appropriate allowance is to be paid. 



#3 Clause 15.7(d) – Consecutive Days Off

(i)  The employer must roster an employee to work ordinary hours in such a way that they have 2 consecutive days off per week or 3 consecutive days off per 2 week cycle.


If an employee is not rostered with the correct consecutive days off, it 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

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 breaks may impact entitlements due to different levels of pay, due to penalty rates 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 more in a week, it becomes unclear to employers which day becomes the ‘11 hour’ day and what other days are entitled to overtime rates for the additional hours worked after 9 hours. . 


For example, Sunday’s overtime rates are higher than the other days in the week. Therefore picking different days as the “11 hour day” can make a difference to the overtime calculation.



#6 Clause 28.3 – Additional Paid Annual Leave

(c) For an employee other than a shiftworker the additional payment is the greater of:

(i)  17.5% of the employee’s minimum hourly rate for all ordinary hours of work in the period; or

(ii) The employee’s minimum hourly rate for all ordinary hours of work in the period inclusive of penalty rates as specified in clause 22—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 including weekends or evenings.


Many employees have rosters that change throughout 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?

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