Paying above Award? Why Classification still Matters

23 Sept

Written By QFVG

One of the most common misconceptions we hear from employers is, “We're paying well above the Award, so the employee's classification doesn't really matter.”

It's an understandable assumption. If you're paying someone more than the minimum hourly rate, surely you've covered your obligations?

Unfortunately, it's not always that simple.

An employee's classification isn't determined by how much you choose to pay them. It's determined by the work they perform, along with factors such as their experience, skills, qualifications and level of responsibility.

Under Modern Awards, classification structures describe different levels or grades of work. Getting the classification right establishes the minimum rate that applies and provides an important starting point for determining an employee's entitlements.

And for growers and horticultural businesses, there are some particular traps worth watching.

Horticulture classifications can change sooner than you think

Under the Horticulture Award, Level 1 is an introductory classification.

An employee can only remain at Level 1 for a maximum of three months of industry experience before progressing to Level 2. Importantly, that's industry experience - not simply time working for your business. Previous experience with another horticultural employer can count.

Consider a seasonal employee who joins your business for harvest. They may be new to your farm, but if they've already spent six months picking or pruning for another horticultural business, treating them as a brand-new Level 1 employee could result in the wrong classification being applied. That's why it's important to look beyond someone's commencement date and understand their experience and the work they are actually performing.

Paying more doesn't make the Award disappear

Paying above the minimum Award rate can provide a buffer, but it doesn't automatically remove your Award obligations.

Depending on the employment arrangement and applicable Award, employees may have entitlements relating to overtime, penalties, allowances, annual leave loading and other conditions.

Where a salary or above-Award rate is intended to compensate for Award entitlements, the arrangement needs to be structured appropriately. Employers can't simply assume that because the total salary looks generous, every Award entitlement has automatically been satisfied.

This becomes particularly important where employees work longer or different hours during peak periods.

Don't forget your pieceworkers

For horticultural businesses using piece rates, classification is also important.

Under the Horticulture Award, the minimum wage guarantee for a pieceworker is linked to the minimum hourly rate for their classification level. The Award also requires piece rates to be set so that a competent pieceworker working at average productivity can earn at least 15% more per hour than the applicable hourly rate. So getting the classification wrong can flow through to the calculations underpinning your piecework arrangements.

Roles change over time

Classification isn't something to check once when an employee starts and then forget about.

Think about the employee who started performing general duties but is now operating more complex equipment. Or the experienced team member who has gradually become responsible for coordinating others, training new starters or taking on greater responsibility.

As people's duties, skills and responsibilities change, their classification may need to change too.

This can be particularly easy to miss in agricultural businesses, where people often step up and “just get on with it” during busy periods. Temporary additional responsibilities can gradually become part of someone's normal role without anyone stopping to consider whether their employment arrangements have kept pace.

A quick classification health check

Ask yourself:

☐ Have we confirmed which Award applies to each role?

☐ Does each employee's classification reflect what they actually do?

☐ For employees under the Horticulture Award, have we considered their previous industry experience when determining their level?

☐ Have any employees taken on additional or more complex responsibilities?

☐ Are our position descriptions current and consistent with the work actually being performed?

☐ If we use piece rates, are the relevant classification levels reflected in our calculations?

☐ If we pay salaries or above-Award rates, have we confirmed that our arrangements appropriately account for applicable Award entitlements?

☐ When did we last review our classifications?

If some of those questions are difficult to answer, it may be time for a review.

Prevention is easier than correction

Classification errors aren't always deliberate. But an unintended mistake can still result in an underpayment.

Taking the time to correctly classify employees when they commence, and reviewing classifications as roles and experience change can help identify issues before they become historical problems that need to be untangled.

How Focus HR can help

Award interpretation can be complex. If you're unsure whether your employees are correctly classified, a proactive review can provide confidence that your arrangements reflect both the work your people are doing and the obligations that apply.

Start a conversation with the Focus HR team about reviewing your employee classifications and Award arrangements. Reach out via the QFVG workplace relations support line at wrteam@qfvgcom.au or 07 3620 3844.