What Is Award Interpretation?
When setting up a new business, there’s a lot to be aware of. It is crucial things to ensure you pay your staff correctly. The Fair Work Australia website lists the 122 awards which cover pay and conditions for workers in Australia, and any one business can be subject to more than one award depending on the different jobs their employees do.
Award Interpretation is the process of calculating the minimum legal amount of pay for hours worked, during a specific period of time, based on the relevant legal agreement (this legal agreement is usually called an 'Award'). The calculation process involves assessment of base hourly pay rates, overtime pay rates, penalty pay rates and allowances.
- Base pay refers to the minimum amount of compensation earned by employees for their services within the ordinary hours of work. Base pay is used to compute overtime and other penalty rates
- Overtime and penalties, which are paid at higher rates, refer to the additional amount of pay for work performed outside the ordinary hours of work. For example, this covers work performed on Sundays, Public holidays or late night shifts
- Allowances are paid to compensate workers for expenses that they incur while on the job or for working in unfavourable conditions. Common allowances include meal allowance, travel allowance, uniform/clothing allowance and accommodation allowance. Find which allowances apply to your business from Fair Work
Awards cover full-time, part-time and casual workers across all industries, in Australia. Awards may be superseded for workers in particular businesses by Enterprise Bargaining Agreements (EBAs), however, the interpretation and application of EBAs can also be referred to as 'Award Interpretation'. Other generic terms for the process include 'custom pay conditions' or 'custom pay rules'.