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Award Rates, Work Agreements and Pay Entitlements

Introduction

An award sets out the minimum conditions and terms for employment. It provides you with information about how much to pay your employees, how much leave or overtime employees are entitled to, notice periods, employee and employer responsibilities, and much more. 

Update: Annual Wage Review Decision

1. The 2020 award wages update is live, see a summary of all the updates and links to the new award rates here

2. In WA, for non national system employers in the farming industry (sole traders and partnerships and trusts with individual trustees) the 2020 state minimum wage will increase on 1 January 2021. 

NOTE: THe Dairy Industry is award Free in WA - See state minimum wage

3. As usual, the increase to the minimum wage only applies to award payments and if you are paying above the award, you do not have to increase the rate paid unless you wish to do so.

4. From 1 July 2020, the high income threshold is $172,200 per annum (WA is tbc) 

Modern Awards and the National Employment Standards (NES)


As of 1 January 2010, all of the states and territories except Western Australia are part of the federal industrial relations system.

This means that all of the states, except WA, have handed over their powers to make industrial laws to the federal government.

The employers in these states and some employers in WA,  are called National System Employers

In 2010, all federal awards in Australia were modernised into industry-based awards. There are currently 122 industry and occupation awards that cover most people working in Australia. The majority of agricultural jobs are covered by either state (WA only) or federal awards and it is important that you know which award applies to the work done on your farm.

It is your obligation to ensure both you and your employee understand the award that covers his or her job. Your state farming organisation can also advise you about which award (if any) applies to your business.

Most of the awards incorporate some of the minimum standards set out in the National Employment Standards

At the end of this section, you will find a summary of information for your industry, regarding pay rates, overtime, ordinary hours of work and classifications as set out in the relevant award. The resources section also has full pay summary PDFs for each award that you can download.

Flexible Working Arrangements

The laws about requests for flexible working arrangements changed on 1 December 2018. Clause 6 of the Pastoral Award 2020, Clause 6 of the Horticulture Award 2020 and clause 6 of the Cotton Ginning Award 2020 provide additional requirements which apply to award employees

The National Employment Standards and Pastoral Award sections on this site have been updated

We have also updated all the contract templates to reflect these changes - these contract templates are available on the Documents you will need to employ someone page of this website and Read more about flexible working at the Fair Work Australia Website (inc. example letters)

REMEMBER

Minimum wages will usually change each year as of the first pay period commencing on or after the 1st of July each year. It is your responsibility to make sure you have the latest and most up to date copy of the relevant award.

RESOURCES AND REFERENCES

 

All awards via the FWO site - Link

Pay summary sheets via the FWO site:
Pastoral - PDF
Horticulture - PDF

NES summary and full information - Link to PDF

WA specific information- PDF

Glossary – PDF

Modern Awards Fact Sheet - Link to PDF

Determining pay rates and classifications

Pay rates

Minimum rates of pay, overtime, and allowances differ between awards and also within awards. Determining wage, rates is relatively easy once you know which award applies and which classification applies to the employee. The Fair Work Ombudsman has a very useful Pay and Conditions Tool (P.A.C.T) that can calculate all your employee allowances, penalty rates, and more.

Once you have entered all the relevant information, you can create a PDF of the pay summary and file it with your Employee Records (see Information specific to your industry sector for relevant pay summary examples).
NOTE

Pay rates will usually change as of the first pay period commencing on or after 1 July each year – double check that you have the current version of the awards and pay rates by visiting the Fair Work Ombudsman web site.

 

Market rates v. award rates

The market rate is the ‘going rate’ in any given industry and is usually above the minimum rate of pay. Employers pay these competitive rates because they want to attract the ‘right person for the job’.

Whilst an employer must comply with the minimum rates of pay that are set by awards, federal laws and state laws in WA, the actual rate of pay will depend on a number of different things.

Some of these are:

    • the responsibilities and duties which are outlined in the Position Description;
    • the skill level and experience that the employee demonstrates in the job; and
    • the current market rates being paid on other farms and in other industries for similar skills and abilities.

Pay for ordinary hours

Ordinary hours of work is an important concept because it is used to calculate leave entitlements, overtime, and termination payments.   Each award defines ordinary hours in a different manner and you can check the ordinary hours of work for the award relevant to you by visiting the Fair Work Ombudsman website or reading the industry specific information below.

Rates for trainees

A trainee is an employee undertaking a traineeship under a training contract. A training contract means an agreement for a traineeship made between an employer and an employee which is registered with the relevant State or Territory training authority. The National Training Wage rates are contained in Schedule E to the Miscellaneous Award 2020.

Junior wages

Junior wages apply to employees under 20 and are the same in the Pastoral Award 2020, the Horticulture Award 2020, and Cotton Ginning Award 2020. They are a set percentage of the adult rate. See the table below for more information.

Age of employee % of relevant adult rate
Under 16 years of age 50
16 years of age 60
17 years of age 70
18 years of age 80
19 years of age 90
20 years of age 100

Supported wages

The Supported Wage System increases employment opportunities for people with disability by giving employers the opportunity to pay a productivity-based wage to people with disability. Each award has information regarding its approach to the Supported Wage System, you can also download the Australian Government fact sheet for more information.

Apprenticeship

Apprentices receive the same entitlements as other employees such as annual leave, personal / carers leave, public holidays, and breaks. However there may be certain entitlements that apprentices don’t receive as they may be entitled to paid leave for training or other training related entitlements. Check the relevant award for a full list of pay rates and entitlements, you can also find more information at the Australian Apprenticeships web site

Pieceworker

A pieceworker is an employee who is paid a rate set by reference to a quantifiable output or task. Essentially, they are paid for what they do rather than at an hourly rate. The Horticulture Award 2020 allows for employees to enter into an agreement to be paid as a pieceworker. There must be a written and signed piecework agreement.

Rates for Managers

Business managers will be award free provided their duties and responsibilities are greater than the highest classification set out in the relevant award.  The National Employment Standards apply, but overtime and penalty rates do not apply as these are award entitlements. If managers are going to work more than 38 hours per week, the additional hours must be ‘reasonable’.

We have included this Permanent Full time employment contract for Managers. Also see the section below for more information about Award Free Employees

NOTE

To determine whether additional hours are reasonable, employers need to weigh up all of the factors below:

  • any risk to employee health and safety from working the additional hours;
  • the employee’s personal circumstances, including family responsibilities;
  • the needs of the workplace or enterprise in which the employee is employed;
  • notice given by the employer of any request or requirement to work the additional hours;
  • notice given by the employee of his or her intention to refuse to work additional hours;
  • whether the employee is entitled to receive overtime payments, penalty rates or other compensation for working additional hours;
  • patterns of work in the industry; and
  • the nature of the employee’s role and level of responsibility.

Employees can refuse to work the additional hours if they are not reasonable.

Overtime

Overtime payments involve an additional percentage of the ordinary rate of pay to compensate the employee for working more than the ordinary hours as defined in the award. Accumulating hours of overtime as time off in lieu has always been permitted by the Pastoral Award 2020 and the Horticulture Award 2020 but the awards were varied as of the first pay period on or after 27 November 2017.  See below for further information about how time off instead of payment for overtime now works. 

Overtime Pastoral Award 2020 and Horticulture Award 2020

The Pastoral Award 2020 the Horticulture Award 2020 and the Cotton Ginning Award 2020 provide a pro forma “Agreement” in Schedule E at the end of each award (Pastoral Award and Horticulture Award) and Schedule D (Cotton Ginning Award)– download Schedule E template (from Pastoral Award) 

Whilst it is not essential that the pro forma ‘Agreement’ be used, (the Award provides that an exchange of emails or other electronic means can be used instead) it is strongly recommended that employers make an electronic version of the Schedule and use it to ensure compliance.

The Cotton Ginning Award 2020 also provides a system of rostered days off. This can mean that employees can take extra time off at the quieter times of the year rather than receiving the extra pay when they work overtime.

Note Most farms have a seasonal variation in workload. It can be difficult to provide consistent hours of work for employees every week of the year. Accumulating hours of overtime as time off in lieu is permitted by the Pastoral Award 2020, the Horticulture Award 2020 and the Cotton Ginning Award 2020. The Cotton Ginning Award 2020 also provides a system of rostered days off. This can mean that employees can take extra time off at the quieter times of the year rather than receiving the extra pay when they work overtime.

Pastoral Award 2020 (only)– ordinary hours of work are 152 hours over a consecutive 4 week period.

Once the 152 hours have been worked, overtime is remunerated at the rate of time and a half for all hours worked with double time being paid for any work done on Sundays. Feeding and watering stock on Sundays is paid at the rate of time and one half. Milking is not regarded as 'feeding and watering stock'. 

Overtime for casual employees is calculated the same way as for permanent employees. That is, overtime is not payable until 152 hours have been worked in a 4-week period regardless of the day the work is performed. 

Part-time employees must be paid overtime rates for all work performed in excess of the agreed part-time hours.

Download: Overtime & Ordinary hours fact sheet which includes 2 example rosters and see how overtime can apply over a 4 week period. 

Updated: Time Off Instead of Overtime (previously time off in lieu – TOIL- or ‘banked hours’). The Award provisions about TOIL changed substantially as of the first pay period on or after 
27 November 2017

As of the first pay period on or after 27 November 2017, the following applies:

1.  A formal written ‘Agreement’ must be entered into if employers wish to take advantage of provisions in the award relating to time off 
     instead of being paid for overtime worked (TOIL) - download Schedule E template (from Pastoral Award)

2. The ‘Agreement’ must be kept as an employee record.

3. All ‘Agreements’ to provide time off instead of payment for overtime must specify as follows:–

(a)  That the employer and the employee agree that the employee may take time off instead of being paid for overtime;

(b)  That all time off must be taken within 6 months of the overtime being worked at times agreed to by the employer and the employee;

(c)  That if time off is not taken within 6 months of the overtime being worked, the employer must pay the employee, in the next pay period for the accrued hours at the rate that applied at the time the overtime
was worked unless the employer has agreed to pay out the accrued overtime earlier;

(d)  That the ‘Agreement’ can be terminated by either the employer or the employee at any time by notice in writing;

(e)  That overtime worked after the ‘Agreement’ is terminated will be paid at the overtime rate applicable to the overtime when worked.

     4. The period of time that the employee is entitled to take off work is equal to the number of hours worked or ‘hour for hour’ – (not overtime rates);

     5. Accrued overtime paid out on termination of employment must be paid at the overtime rates which applied at the time the overtime was worked - not hour for hour.

     6. Employers MUST keep records of:

           (a) the number of overtime hours worked;

           (b) when those hours were worked, and

           (c) an updated record of the employee’s overtime balance (banked hours);

     7. Employers must not exert undue influence or pressure on an employee to make or not to make an agreement to take time off instead of overtime.

NOTE 1: This decision and the variation to the award underline the importance of keeping accurate records of hours worked. In particular, it will be important to record which hours attract the double time penalty for Sunday work which only applies once 152 hours have been worked in a 4-week period.

The Pastoral Award 2020 provides a pro forma “Agreement” in Schedule E at the end of the award – download Schedule E template (from Pastoral Award)

Whilst it is not essential that the pro forma ‘Agreement’ be used, (the Award provides that an exchange of emails or other electronic means can be used instead) it is strongly recommended that employers make an electronic version of the Schedule and use it to ensure compliance.  

The Cotton Ginning Award 2020 provides a system of rostered days off. This can mean that employees can take extra time off at the quieter times of the year rather than receiving the extra pay when they work overtime.

Note

Most farms have a seasonal variation in workload. It can be difficult to provide consistent hours of work for employees every week of the year.  Accumulating hours of overtime as time off in lieu is permitted by the Pastoral Award 2020 and the Horticulture Award 2020.  The Cotton Ginning Award 2020 provides a system of rostered days off.  This can mean that employees can take extra time off at the quieter times of the year rather than receiving the extra pay when they work overtime.

Allowances

Allowances are usually paid to employees to compensate them for working under ‘harder’ than normal conditions or for work-related expenses, such as travel and accommodation. Other allowances are paid for particular skills or responsibilities (e.g. first-aid allowances). Awards set allowances and these are updated each year on 1 July.

Classifications

All award employees, should be given a classification which accurately reflects their skills, experience, and the work they are responsible for carrying out.

In the industry specific information at the bottom the page you will find a summary of information regarding the relevant award for your sector. This will include links to classification summary sheets to help you determine the classification that best fits your employee. If you are not sure check with an industry advisor or your legal support.

An employee’s classification and pay rate should be set out in their Letter of Offer and Contract. This should be signed by the employee and their classification should be discussed and agreed upon at the interview. You should also let the employee know when their classification will be reviewed and document all performance appraisals and discussions around changing classifications.

Award free employees

Awards apply to particular industries and cover employees who perform similar tasks which are described in the award as classifications.  Managers are usually not covered by awards if their duties and responsibilities are of a higher level than laid down in the award classifications.

Varying Award terms

  • An Employment Contract can be verbal or written but it is preferable that it be written so that each party is clear about the terms and conditions which apply. Employment contracts can provide terms which are more beneficial than the award or the National Employment Standards but they should not contain terms which are less favourable. For example, if a contract has a base rate of pay that is lower than the minimum pay rate for that classification in the award, then the award terms will apply regardless of what the contract says. See the section "How do I Employ Someone?" -Contracts for contract templates and more information.

  • An Enterprise Agreement is a formal document which is between you and your employees or a group of employees. The content of the enterprise agreement must be discussed with employees and you are required to give consideration to their views. Enterprise agreements must be assessed and approved by the Fair Work Commission. Employees must be Better Off Overall under an agreement than they would be under the relevant award and agreements cannot exclude the 10 minimum conditions in the NES. Enterprise agreements must have an expiry date of no more than four years from the date of approval of the agreement by the Fair Work Commission. If you are thinking of introducing an enterprise agreement into your workplace, see the FWC’s step by step guide to making a single enterprise agreement. You can also access, or apply to vary, existing agreements.
REMEMBER

National system employers can enter into enterprise agreements under the federal industrial laws.

Non-national system employers in WA can use the state industrial relations system to enter into a workplace agreement with their employees.


  • Individual Flexibility Agreements: All modern awards and enterprise agreements contain a ‘flexibility term’ that lets you adjust the award or agreement to best meet the needs of an individual employer and employee. Individual flexibility arrangements (IFA’s) can only vary arrangements when work is performed, overtime rates, penalty rates, allowances, and leave loading. The Individual Flexibility Agreement must pass the BOOT test and be agreed to by the individual employee. You cannot require an employee to enter into an IFA and it cannot be made a condition of employment. The offer to enter into an IFA must be in writing. You can send an employee a letter of offer for an IFA using the template provided.

Annualised salaries (from 1st March  2020)


As of the first full pay period commencing on or after 1 March 2020, the Pastoral Award 2020 has been varied to enable employers and employees to agree in writing for the employee to be paid an annualised wage or a salary instead of being paid an hourly rate.

This is similar to the IFA and may be useful for farmers provided they keep excellent time records.

The annualised wage can take into account any or all of the following:

  • Minimum weekly wages
  • Allowances and special allowances
  • Hours of work and rostering
  • Overtime
  • Penalty rates
  • Annual leave loading
  • Payment for public holidays
No Disadvantage:The annualised salary must be no less than the amount the employee would have received under the award for the work performed over the year of the Agreement – or less if the employment is terminated before a year. This is similar to the BOOT test for an IFA.
Annualised salary resources and information

Download: annualised salary flat rate calculator (coming soon) can be used to calculate the salary to ensure that the employee is not disadvantaged.

Download: annualised salaries fact sheet for further information about annualised salaries and how you might use them in your business.

Download: full time/permanent employment contract template for employees on annualised salaries which also contains details about the legal requirements for annualised salaries.

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