Salaried Staff: are you SURE you're paying enough?

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When it comes to salaried employees, there needs to be some method behind the numbers. An employee's salary still needs to be high enough to cover their minimum entitlements (including any "significant overtime").

Quiz time!

Do you know why your staff's salary is what it is?
Do you know roughly how much of a 'buffer' you have between minimum wage and the salary your provide?
Do you know the limitations to be aware of? I.e. How far the salary does stretch, what it does cover... and when you might need to pay a little extra?

Not sure? Let's put some method to the madness... before Fair Work come knocking on the door...

The Fair Work Ombudsman (FWO) has taken Super Retail Group to the Federal Court, alleging the company underpaid its salaried employees workers by more than $1 million between January 2017 and March 2019. Why? Allegedly, they didn't provide their salaried employees high enough salaries to cover their minimum lawful entitlements due to the significant overtime performed. The largest individual underpayment was as much as $34,500!

So, what does this mean for employers?

Fair Work is cracking down on organisations that are underpaying their staff, including those businesses that self-identify an underpayment as having occurred.
Employers beware! Just because you're paying an employee a salary, you still need to ensure that their salary meets the minimum entitlements, under the relevant legislation.

If an underpayment has occurred, it’s essential that:

It’s dealt with quickly
It’s dealt with correctly (after SRG picked up on their underpayment they proceeded to calculate the back pay incorrectly and FW has fined them for this).
Checks are done to ensure that there are no additional underpayments occurring within the business.

What do we suggest?

With Award and minimum wages expected to increase as of June/ July 2023, it is important to be mindful of your employee's current salaries to ensure they sit above minimum wage (inclusive of ALL minimum entitlements).
Be open and upfront with your employees. When employees work a lot of overtime or a roster with many variations, annualised salary packages may not always be the best option.

Misconceptions around salaries are more common than you think and as an employer, it is easy to get them wrong. If you're an employee who thinks they are being underpaid or are an employer who has any questions regarding salary packages, reach out to the Employii team ([email protected]).

For more information head to the Fair Work Ombudsman website (here).

Author: Chelsea Finlay (HR Officer)

Salaried Staff: are you SURE you're paying enough?

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