08 Oct 10 ways to comply with FWA
Many in business find it difficult to comply with the Fair Work Act (FWA). The following are 10 ways to comply with FWA:
1. The first thing to comply with FWA is the National Employment Standards (NE. The 10 minimum entitlements of the National Employment Standards (NES) start with knowing what they are. These entitlements apply to casual, part time and permanent employees:
The 10 minimum entitlements of the NES are:
Maximum weekly hours
Requests for flexible working arrangements
Parental leave and related entitlements
Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave
Community service leave
Long service leave
Notice of termination and redundancy pay
Fair Work Information Statement
2. 10 Ways to comply with FWA requires that this Fair Work Information Statement be given to all your employees and can be found on the Fair Work Ombudsman’s site and looks as follows:
Who’s covered by the NES
All employees in the national workplace relations system are covered by the NES as a minimum regardless of the award, registered agreement or employment contract that applies.
Casual employees only get NES entitlements relating to:
unpaid carer’s leave
unpaid compassionate leave
unpaid family and domestic violence leave
community service leave
the Fair Work Information Statement.
In some states and territories long serving casuals are eligible for long service leave.
Where there is an expectation of ongoing work for a casual and the casual has been employed regularly and systematically for at least 12 months, they have extra entitlements under the NES.
- the right to request for flexible working arrangements
- access to parental leave
3. 10 Ways to Comply with FWA understand which Modern Awards are relevant to your industry and employees
Are specific to an industry for your business and the function your employee performs. Therefore, your business may have multiple Modern Awards depending on what type of employees you have and their roles in the business.
What industry is your business in and what function does your employee do? For example: If your business is in the storage and wholesale Industry then your business Modern Award is the Storage Services and Wholesale Award.
However, if you employ a bookkeeper or administration person then they are under the clerks – Private Sector Award and so on for each of your employees depending on the work they perform.
Important points you need to look at to understand how to apply Modern Award to your employees:
Look at point 4. Coverage which explains the industry the award covers for employees based on your business industry. It will also notify you of other Modern Awards that cover employees in slightly different functions even though they work in a storage and wholesale business.
For example, using the Storage Services and Wholesale Award 2010 (MA0000084):
To get even more clarity about which of your employees are under this award refer to classifications.
See image below which gives an example of the employees’ type of responsibilities, training and experience covered by this award:
4. 10 Ways to Comply with FWA Minimum Wages
This is determined by the Modern Award of relevance and by the national minimum wage.
Continuing with the Storage Services and Wholesale Award example. You can see below how to determine the minimum wage applicable to your employees based on their level of skill and experience as well as responsibilities:
5. 10 Ways to Comply with FWA Average Maximum work week 38 hours plus reasonable additional overtime. Understand the effect of extra hours on a person’s wages is that it decreases the hourly rate earned.
“I work 42.5 hours per week, but my pay slip is only for 38 hours, how is that fair or even legal?” Quote taken from a whirlpool forum discussion.
I know how you feel, I used to be an employee and would have questioned that discrepancy too. How is it that we are only supposed to work a maximum of 38 hours per week on average according to the National Employment Standards? However, most of us work a minimum of 40 hours plus and do not get paid overtime.
The confusion lies in the fact that the average maximum working hours of 38, is based on the Fair Work Act and is about the minimum entitlements for employees. On the other hand, businesses generally do not operate on a 38-hour week. Typically, operating hours are 8:00 or 9:00 am start and 4:30 or 5:00 pm finish with no fixed lunch break times. Rather, people take lunch when they can and for not much longer than 30 minutes.
Remember, the 38 hours is an average plus reasonable additional over time. It is also important to bear in mind that this is based on the modern awards and minimum wages. If a person is paid minimum wage at an hourly rate, their wages must fully compensate them for all hours worked.
The fairness test:
However, there is a test of fairness and reasonableness, the more hours worked for the salary given, the less earned per hour. For example, if the salary received is 80,000 and the hours worked each week are an average of 50 then the hourly rate is just over $30. The minimum wage is $19.49, so we see that is still a lot more than the minimum wage.
On the other hand, if on the same salary the hours worked are 100 then the hourly rate is only $15.38. Consequently, if a person’s salary is not high enough to cover all the hours worked it could put them under the minimum wage. Therefore it would not comply with FWA for minimum wage. Further, that minimises a person’s sleep, rest, social and other things that make life enjoyable. That is one of several factors considered for fairness and reasonableness. Other factors are the impact on a person’s health and well-being, family obligations, the business needs, industry standards, and so on.
The Fair Work Act considers both the needs of employees and of the business. Consequently, as business owners and employers we need to keep in mind if the demands we place on employees for their salary in terms of work hours, stress levels etc are fair and reasonable. As employees we need to consider if the salary, received is suitable for the demands of the job and our lifestyle expectations.
6. 10 Ways to comply with FWA Allowances, penalty rates, over time, shift allowances, uniform allowances, travel allowances, meal breaks (paid and unpaid) are important for compliance.
Depending on the industry you are in and the employees job function check the Modern Award to see if there are any special allowances you need to provide for your employees to comply with FWA.
7. 10 Ways to comply with FWA Leave annual, personal/carers, long service, domestic violence, leave loading, parental leave. Various types of leave are to be provided for your employees to comply with FWA.
As you will see from the screenshot below there are various types of leave entitlements available depending on the circumstances:
As you will see in August 2018 there is leave now for Domestic Violence.
Because of regular changes, I highly recommend you register with the Fair Work Ombudsman to receive updates by email. See the screen shot below of the registration link available on the Fair Work Ombudsman’s website:
8. 10 Ways to comply with FWA Policy and Procedures you need to check which of these is relevant to your business and employees to insure your business is operating in line with the FWA and Australian Legislation:
Other Governing laws your business needs to comply with in Australia are important to have addressed with your employees. If you have good policy and procedures in place it will save your business from fines and potential losses in productivity and court cases.
List of Policy and Procedure Documents your business may need to have depending on what type of business you are in are below:
- Equal Employment and Anti-Discrimination
- Bullying and Harassment
- Performance Management
- Social Media
- Internet, Email and Computer Use
- Security and Privacy
- Whistle blower
- Code of Conduct (The way we behave around here)
- Alcohol and other drugs
- Work Health and Safety (Occupational Health and Safety
9. 10 Ways to comply with FWA means having Performance management procedures for fairness and to avoid an unfair dismissal or adverse action:
There are specific procedures to manage performance in a fair and compliant manner. You can find a checklist and instructions on the Fair Work Ombudsman’s site:
The Fair Work Ombudsman provides some excellent tools, tips and courses to help you learn about managing employees in Australia. You can do the courses anonymously or register and receive a certificate.
It is tough to run a business and be across all the important areas of legislation at least we can obtain free courses and guides to help. Click on the link here to go to the various managing employee courses available free of charge.
These courses only take a few minutes and could save your business thousands and improve productivity, so they are well worth your time.
10. 10 Ways to comply with FWA means Keeping accurate records, pay slips etc. This is an important aspect of employment law in Australia. Employers must keep time and wage records for 7 years to comply with FWA. If a Fair Work Inspector (FWI) asks for these records, you must provide them:
The records in relation to employees have specific requirements. In summary they are:
- Weekly time and wage records
- Employer and employee details
- Ending employment and the reasons
For more detailed information you can go to the link provided above about keeping accurate records. Further, you can do the online course provided by the Fair Work Ombudsman which will teach you how to make, update and manage employment records for your business.
In conclusion, the above 10 Ways to comply with FWA will provide you with the basic information you need to know. It is essential for anyone employing or considering employing people to work for them in Australia to know these 10 Ways to comply with the FWA.
Putting it all together to make sure your employees are better off overall known as the BOOT Test. First, the NES entitlements must be adhered to with your employees. Make sure the average weekly hours and reasonable overtime plus the employees circumstances and wages meet the fair and reasonableness test.
Check the Modern Awards for your industry and the work an employee performs for the minimum wage entitlements based on their level of skill, experience and responsibility. Further, check for any other allowances to be provided.
Your business must keep accurate records, so invest in a quality accounting system. There are many low cost options available that have provisions for the Australian work place system. Accounting systems like Xero, SAASU, Quickbooks and MYOB are low cost and meet the Australian work place system including single touch payroll.
If you get these 10 things right for your employees, you will be able to relax knowing your business complies with employment law in Australia. Consequently, your employees will typically be more productive, and you and your business will be less likely to end up with fines and time costs incurred in a Fair Work matter.
For further information in short tutorials you can check out our Vlog on National Employment Standards and Navigate Industry Awards. If you would like support or advice about human resources management or hiring your next employee please get in touch.
If you would like to know if your business has all the right ducks in a row to comply with FWA you can contact me to receive a free diagnostic tool.