Most employees are covered by modern awards. Modern awards are industry or occupation-based and out minimum terms and conditions of employment.
Modern awards do not generally allow for payment of day rates or flat (all up) rates, which is common practice in agricultural businesses.
Importantly, paying flat or day rates carries significant risks of non-compliance. In particular, an employer can easily be caught out if an employee works significant overtime in a pay period, changes their rostering arrangements, if award rates increase or if the basics of the employment arrangement (such as hours worked) do not eventuate.
Unless there are suitable frameworks in place, the rate paid may not be adequate to satisfy the award entitlements leading to the risk of underpayments and breach of the Fair Work Act, which mandates compliance with modern awards. This could lead to significant back-pay claims and significant monetary penalties of up to $18,780 per contravention for an individual and $93,900 per contravention for companies. Higher penalties apply for ‘serious contraventions’ involving knowing contraventions or a systemic pattern of conduct: up to $187,800 per contravention for an individual and $939,000 per contravention for companies. Individuals can be liable for contraventions if were involved in the contravention.
The Fair Work Ombudsman is the regulatory body responsible for monitoring compliance with employment laws, with wide powers to investigate breaches and take enforcement action, including prosecution of offences. It has expressly stated that during the year 2023-2024, it will prioritise underpayments and workplace protections in five sectors, including agriculture.
Compliance is especially important where workers are engaged via the Pacific Australia Labour Mobility scheme, or on a visa sponsored by the employer, where any non-compliance with employment laws puts the employer’s status as an “approved employer” and therefore the entire arrangement at risk.
How can we help?
We can assist in reviewing pay rates to ensure compliance, as well as to rectify any underpayments, mitigate the risks and put appropriate systems in place to ensure compliance moving forwards or assist with investigation undertaken by the Fair Work Ombudsman.
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