Ensuring that the salary provided to any employee, but particularly a manager, can be difficult. This difficulty can result in spectacular consequences as wave of sophisticated businesses that have failed to meet minimum standards have demonstrated recently. From massive retailers, to distributed franchise networks, it is clear that, despite their capacity, many businesses have ended up with underpayments and breaches that have arisen from sloppy salary practices including poor modelling and lacklustre or even non-existent review of the modelling effectiveness. The result is literally millions of dollars in underpayments, most of it to managers. In light of the clear gap in understanding and practice, and the coming prescriptive changes to many annualised salaries, ACAPMA is running a series of Workshops to examine the failure points and to arm attendees with the information and resources that they will need to ensure their modelling and systems are up to scratch.
A salary, is an annual amount that has the intention of providing a single payment that includes all of the elements that an employee is entitled to (Base Rate, Loadings, Allowances, Penalties etc). This single annual amount is then divided into 12, 26 or 52 increments according to the businesses pay cycle (monthly, fortnightly, weekly). The process by which the salary is set, and what is included in it is referred to as modelling.
“This is often the first failure point in salary underpayment cases. If the initial calculations provide for 38 hours of Day Shift at Base Rate, but the actual work is 40 hours, then the modelling has failed and there will be an underpayment” explained Elisha Radwanowski, Executive Manager for Employment and Training for ACAPMA.
“Modelling also often fails due to elements like allowances, loadings or penalties being ‘forgotten’ or misapplied. One of the most common elements missing from salary modelling is public holiday treatment. The result is that if it is not included in the salary modelling, then the employee should receive an additional payment when they work a public holiday, failure to do so would result in an underpayment” continued Elisha.
The aim of the salary, and the justification for its use, is that the employee will be better off overall receiving the salary than they would receiving the individual entitlement elements outlined in the relevant Award/Agreement. Ensuring that the salary provided continues to do this once the employee commences actually working, requires the modelling (or the planned work and inclusions) to be compared to the reality (or the actual hours, work and resultant entitlements).
“The recent cases have highlighted very clearly, that even when the modelling is all encompassing and perfect on day 1, failure to regularly review, not just the modelling of entitlements and inclusions, but to compare the planned hours to be worked with the actual hours worked, can very easily add up to disastrous underpayments” added Elisha.
“These pressures and expectations are not new. The requirement for a salary to provide a situation where the employee is better off overall than they would be receiving the individual elements of the Award/Agreement is not new. In order to achieve this expectation, and therefore avoid both breaches and underpayments, it has always been a requirement to model salaries appropriately and review those models in a real world setting” continued Elisha.
The salary requirements are not new, but there are changes coming that will effect the salary setting and review requirements for many staff following changes to the Awards. ACAPMA has covered these changes in depth here: https://acapmag.com.au/2020/02/annualised-salaries-changes-in-effect-1-march-2020-get-ready-now/.
“The March 1 2020 changes to the Awards will result in very detailed and clear requirements for businesses around modelling, communication of modelling to employees, timesheet and record keeping requirements, the requirement to review actual to modelled hours and pay any ‘make good’ payments required within 14 days, as well as other specific requirements. These changes will not effect all salaried staff, only those on the effected Awards. However, the breaches and failures we are seeing now are not about the changes, they are not about the select staff covered by the Award changes, they are about the first principles of salaries being incorrectly, or inappropriately applied and/or managed”.
“These most recent and public failures of large businesses to meet these expectations, and the resultant breaches, should be a clear wake up call to all businesses, regardless or size or industry, that if they are paying any staff on a salary, that they need to immediately go back to first principles, review their modelling to ensure that the employee is better off overall and then put into place, and use, a system for reviewing the actual hours worked to the modelling, to ensure that underpayments do not result” explained Elisha.
ACAPMA recognises that the need to go back to first principles, and the upcoming changes that will apply to some staff, means that Members are seeking information and support in this area, as such a series of Salary Workshops are being conducted, the details of which are below. These Workshops are focused on ensuring that attendees leave with the practical Guides and Tools, including; Checklists, Process Flows, Salary Calculators and detailed Information Packs that will assist them in achieving compliant operations.
ACAPMA Salary Workshop 2020
| Sydney Tuesday, 7th April 2020 | Brisbane Wednesday, 8th April 2020 | Melbourne Thursday, 16th April 2020 |
Cost: FREE for ACAPMA Members, $99 inc GST for Non Members
To Register: Email the Location and Date as well as the name, phone, email and position of the persons you would like to register to: sarahh@acapma.com.au . Location will be advised on confirmation of registration.
Note: The ACAPMA Salary Workshop 2020 will be run in conjunction with the Petroleum Contractor Qualification public Consultation Workshops, where petroleum contractors and operators will be called on to provide their feedback on the recently released Petroleum Contractor Competencies which are out for public comment. The two workshops will run back to back so operators will be able to attend both if desired.
