Interpreting Awards: Unveiling The Hidden Layers

Australia is a pretty lucky place. We've got great weather, stunning scenery, and best of all - not too many people! Plus, we usually have plenty of work to do around. But one downside of having so much work to be done and not a huge population is that organizations that fight for worker's rights, like unions, hold a lot of power and influence.

No matter which way you lean politically or how you feel about unions, it's tough to argue with the impact they've had on our workforce. Unions play a significant role in establishing award agreements, which protect workers' rights in specific industries by outlining overtime pay, public holiday compensation, casual loading, and minimum shift duration.

These award agreements form a basic standard for how employees in different industries should be employed and paid, and honestly, that's a good thing! It helps ensure that everyone is treated fairly and reduces worker exploitation.

However, even for the most well-meaning employers, these award agreements can be exceptionally convoluted and cause headaches for payroll - it's easy for employees to know what they should be paid, but employers have to navigate the complexity of paying hundreds or thousands of employees. It's a juggling act that's not for the faint of heart. 

• Navigating The Quagmire Of ‘standards’

With over 130 awards to choose from, the Fair Work Ombudsman's list can be overwhelming - from Hydrocarbon Field Geologists to Food, Beverage, and Tobacco Manufacturing. And the confusion doesn't stop there. Separating awards like the Fast Food Industry and Restaurant Industry adds an additional layer of complexity to even the same industry. For example, working at a ski resort means one set of rules, but a different location means a whole new set. Talk about mind-boggling!

• A Head-Scratching Read

If you're having trouble sleeping at night, I will suggest you print out a copy of the "Social, Community, Home Care and Disability Services Industry Award" Trust me, you'll be put to sleep in no time.

It's like reading a legal dictionary. It’s important to give the writers credit here, these documents are long not because the writers are long-winded, but because they want to remove as much ambiguity as possible. The downside to this is that it can take multiple days and multiple readings to fully understand and make sense of it. 

• Blurred Line Of Ambiguity

Awards may seem clear initially, but they're filled with grey areas. Take for example the overtime penalty rate. It's usually time and a half for the first two hours and double time after that, but what happens when it's on a special rate day like Saturday? And how does it affect your superable earnings? 

And don't even get us started on casual loading - some awards spell it out clearly, while others leave it open to interpretation. Ambiguity is the name of the game when it comes to awards.

• Flexibility In Award Criteria

Awards can be tricky, but did you know some have built-in flexibility? Over time, for example, most awards say if you work more than 38 hours a week, you get overtime. But what if those hours are spread out? Some awards calculate it on a strict weekly basis, while others allow it to be spread out over a fortnight or even a four-week roster. And sometimes, it's up to the employer. 

This flexibility can be good, but it also leaves room for interpretation. Imagine if you have a 9-day fortnight roster. Employers can use this flexibility to interpret the award in their favour. So, keep an eye out for the fine print in your awards.

• The Non-Standardized Landscape

While we can say awards are very similar in nature, there are always specific differences in how they are defined and used. This problem is compounded by the lack of consistency and standardisation between awards.

An obvious example of this is that some awards might be given rates on a weekly basis and others on an hourly basis. A much simpler calculation is made possible by calculating one from the other and rounding off their differences. If all awards have a standard way of presenting information, then many issues could be excluded.

• Always Evolving, Always In Flux

Exposure to the fluid nature of legal documents was particularly apparent to businesses during COVID-19 – with new clauses popping up almost overnight. It’s important to remember that these award agreements are always evolving and need constant attention to keep everyone in compliance. Think of them as living creatures that need regular check-ups to make sure employers are playing by the rules.

What to do about it?

Award interpretation is a complex and challenging aspect of payroll in Australia, as demonstrated by the number of high-profile employers who have faced penalties for these mistakes in recent news. Even large companies with dedicated payroll teams can struggle with this task. 

Honest interpretation mistakes are common, and understanding awards can be difficult, and that’s where our business BlueSky comes in. 

We are the experts in Interpreting awards, having done so for thousands of organisations over the last 30 years. Make this problem our problem and maybe you can spend more time at Australia’s beautiful beaches!