“Joe Bloggs is not covered by any award because I pay him a salary well above the award minimum rates”.
This is a common misconception amongst business owners which can lead to non-compliance with award terms and ultimately land you in hot water!
Modern Award coverage is determined by referring to the “Coverage” clause contained within every modern award. Award coverage is based on either an entire industry e.g. Black Coal Industry, or a specific occupation e.g. Commercial Sales. If your business operates within a particular industry or if you employ a person in a specific occupation for which a modern award exists, then it is possible that “classifications” exist within the award that could apply to your workers. If this is the case, then no amount of overaward payments can stop your workers from being covered by the award and you must ensure that you are complying with all of the terms contained within the award as they apply to your workers.
Notwithstanding this, overaward payments can be offset against the minimum monetary entitlements imposed by the award. E.g. You may decide to pay an overaward weekly rate and offset the overaward amount against payment of entitlements such as annual leave loading or overtime rates. However, such offsetting arrangements need to be documented correctly for them to be valid.
If you are a business owner and you’d like to discuss this in more detail, contact our Employment Law Team today.