10 common myths about employee’s pay

Some employers have interesting – and unlawful – ideas when it comes to paying their people. In light of the recent decision to cut penalty rates, we explore 10 of the common myths about workers’ pay.

The Fair Work Commission’s recent decision to cut penalty rates has attracted widespread attention. But employers who think it means they no longer have to pay more to get employees to work outside of regular hours will be disappointed.

The new rates don’t apply across the board and in some cases, they don’t apply at all. More importantly, most employees will still be entitled to a significant loading for working late night, Sundays and public holidays… sometimes as much as 225%.

Still, it got us thinking about some of the common myths we see when it comes to paying workers. And with the introduction in parliament of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 on 1 March 2017 these “misconceptions” could cost employers deemed to be exploitative (think 7-Eleven, Caltex) hefty fines and punishment.

Here’s our top 10 list.

MYTH 1: Paying low, flat rates of pay for all hours worked is fine, so long as the worker agrees.
FACT: Minimum lawful pay rates are mandatory for all workers. In many jobs, employers must pay penalty rates evening, weekend, public holiday and overtime work.
MYTH 2: It’s okay to put a worker on a lengthy unpaid work trial.
FACT: Employers can place a worker on an unpaid trial only for as long as they need to reasonably demonstrate that they have the skills required for the job. Depending on the nature of the work, this could range from an hour to one shift.
MYTH 3: Employers don’t need to pay staff for time they spend opening and closing a store, attending meetings or training outside their paid work hours.
FACT: An employer must pay an employee for all the time they dedicate to work. That includes opening and closing a store. For instance, if an employer requires an employee to arrive at work at 7.45am in anticipation of an 8am store opening, they need to be paid from 7.45am. If a meeting or training is compulsory, then it counts as work too.
MYTH 4: Employers can deduct money from an employee’s wages to cover losses from cash register discrepancies, breakages and customers who don’t pay.
FACT: Deducting an employee’s pay this way is usually unlawful. Employers can only make deductions in very limited circumstances.
MYTH 5: An employer can oblige an employee to buy store produce such as clothing or food.
FACT: No, they can’t – even if they offer a staff discount. A worker can purchase food and clothing from anywhere they want.
MYTH 6: When a young worker is looking to get a foot in the door, it’s okay to give them an unpaid internship.
FACT: Employers can only make an internship unpaid if it’s a course requirement at an authorised educational or training institution.
MYTH 7: Employers can pay young workers as ‘trainees’ or ‘apprentices’ without lodging any formal paperwork.
FACT: An employer can’t pay an employee trainee rates just because they’re young or new to the job. To pay a worker at trainee or apprentice rates, they must first negotiate and lodge a registered training contract.
MYTH 8: It’s okay to pay an employee with goods such as food or drink.
FACT: Payment-in-kind is unlawful. Employees need to be paid wages for all work they perform.
MYTH 9: If a worker has an Australian Business Number (ABN) they’re an independent contractor and minimum pay rates don’t apply.
FACT: Simply having an ABN doesn’t automatically make a worker an independent contractor. Instead, Fair Work will apply tests of both fact and law to determine whether a worker should be classified as an independent contractor or an employee. Labelling a worker as a contractor and requiring them to obtain an ABN may not even be relevant.
MYTH 10: Employers only need to give employees pay slips if they ask for them.
FACT: Employers must give all employees a pay slip within one working day of payday. Employers can give employees paper or electronic pay slips, such as a link sent via email.

Want more?

If you’re not sure about your obligations to staff, get in touch. After all, getting it wrong won’t just lead to fines and penalties, it can also cause long-term damage to your reputation and your business.