The following advice applies to customers who have installed the following pre-built Modern Awards into their business:
- Cleaning Services Award 2010 [MA000022]
- Fast Food Industry Award 2010 [MA000003]
- Hair and Beauty Industry Award 2010 [MA000005]
- Hospitality Industry (General) Award 2010 [MA000009]
- Pharmacy Industry Award 2010 [MA000012]
- Restaurant Industry Award 2010 [MA000119]
- Registered and Licensed Clubs Award 2010 [MA000058]
- Retail (General) Industry Award 2010 [MA000004]
An update for these awards has been released which may impact the wage calculations for part time staff:
Rule Additions
Rule 1 – “Top Up of Standard Hours - Part Time”
This rule provides that where a part time employee has worked less than their agreed weekly hours, the remaining hours will be added to their weekly hours worked total and paid as ordinary hours.
Rule 2 – “Apply Overtime - Over Standard Hours - Part Time ”
This rule provides that where a part time employee has worked more than their agreed weekly hours, the excess hours will be treated and paid as overtime.
You can view these rules by going to Business > Payroll Settings > Rule Sets and then selecting the appropriate pay condition rule set. Additionally, information on how to configure awards can be found here.
Standard Hours
Standard hours for an employee may be configured by going into the employee profile then to the Pay Run Defaults section. A 'per week' number of hours may be entered ('basic' option) or daily hours may also be entered ('advanced' option)
Update Notification
You will see a notification on your business dashboard letting you know about this update:
N.B. If you've applied award updates since May 2, 2017 this change will already be applied in your business and the dashboard notification will not be shown.
Legal Explanation
A detailed explanation of the reasoning has been provided from the solicitors at Employment Innovations - the employment law firm that supplies the award interpretation for the awards mentioned above:
Pay Obligations for Part Time Employees
You have requested clarification of the legal operation of various Modern Awards in respect to the payment obligations for permanent part time employees.
The Modern Awards in question (the Awards) are:
• General Retail Industry Award
• Hospitality Industry (General) Award
• Fast Food Industry Award
• Restaurant Industry Award
Definition of a Permanent Part Time Employee
The four Awards in question contain definitions to assist in the classification of employees as, either permanent full time, permanent part time or casual. The number of hours worked per week and the flexibility in the work performed will be the determining factors in appropriate classification of an employee. A permanent full time employee is obviously an employee who works at least 38 hours per week, every week. It is often more difficult to determine the correct classification of employees who work less than 38 hours a week, as either permanent part time or casual.
The Fair Work Commission has placed greater emphasis in recent times on creating a clearer distinction between these two classifications, to ensure that employees are receiving appropriate compensation for the type of work performed.
As a result, the Modern Awards contain clear parameters as to whether an employee should be classified as part time or casual. Generally speaking a true casual employee is one who is engaged on a varying and unpredictable roster and who is effectively terminated at the end of each shift, without the expectation of ongoing employment. They are paid a 25% loading to compensate them for the absence of paid annual or sick leave, and no entitlements to redundancy or notice of termination.
By contrast, the Awards state that a permanent part time employee is one who works less than 38 hours a week, but on a predictable and regular roster. All the Awards have requirements (which vary slightly in their obligations) to make a written contract with the part time employee stipulating the number of hours they will work each week, the days of the week they will work and their start and finish times. If the employer or employee wants to change the agreed pattern of work this must be agreed in writing before the change happens. By way of example, an office worker may have school children and has reached as agreement with her employer that she works Monday to Friday from 10am to 3pm each day. The employer is obligated to pay the employee for 20 hours every week. If either the employer or employee wants to change the agreed hours, this must be done in writing. If the employee takes a day off, this will be paid as either annual leave, sick leave or potentially be authorised unpaid leave.
We often hear that this strict rostering pattern for permanent part time employees, which is easy to comply with in an office environment, doesn’t ‘suit’ a fast food or hospitality environment where many of the employees are school/university age and want to change their rosters on a regular basis. However, the Awards contain these strict parameters and employers who breach them will be held non-compliant and could be requested to pay back pay to affected employees.
Therefore, when an employer enters into a written contract with a permanent part time employee (as required by the Award), that the employee will be rostered for say, 25 hours each week then a contractual obligation arises for the employer to pay the employee for 25 hours a week. If the employer only rosters the employee to work for 20 hours, the obligation remains to pay the equivalent of 25 hours a week, unless there has been an agreed variation in advance to change the employee’s pattern of work.
If an employee or employer is not able to commit to the agreed pattern of work over a reasonable period of time, then the employee should be classified and paid as a casual (see clause 12.6 of the Fast Food Award replicated below).
We have set out below the rostering obligations for permanent part time employees which all four Awards contain, to a similar degree.
Fast Food Award
12. Part-time employees
12.1 A part-time employee is an employee who:
(a) works less than 38 hours per week;and
(b) has reasonably predictable hours of work.
12.2 At the time of first being employed, the employer and the part-time employee will agree, in writing, on a regular pattern of work, specifying at least:
- the number of hours worked each day;
- which days of the week the employee will work;
- the actual starting and finishing times of each day;
- that any variation will be in writing;
- that the minimum daily engagement is three hours; and
- the times of taking and the duration of meal breaks.
12.3 Any agreement to vary the regular pattern of work will be made in writing before the variation occurs.
12.4 The agreement and any variation to it will be retained by the employer and a copy given by the employer to the employee.
12.5 An employer is required to roster a part-time employee for a minimum of three consecutive hours on any shift.
12.6 An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with clause 13—Casual employment.
We hope this advice clarifies the obligations that arise when engaging a permanent part time employee, both in terms of rostering requirements and payment for agreed hours of work.
Yours sincerely
(name withheld)
Senior Solicitor
Employment Innovations