Employers often run a risk by paying lump sum salaries to award covered employees… But why?
The risk lies in two forms.
Firstly, employees forget to check award increases. This means that employees can start by being paid well above the award but over time the award catches up and overtakes the payment.
Secondly, a lump sum salary, even if it is above all award entitlements, may not be compliant with the award unless the employer has not entered individual flexibility agreements with the employee. Individual Flexibility agreements enable employers to bundle all entitlements in one lump sum salary. The agreements must comply with the award requirements which can differ from award to award.
The risk to the employer is they could make a claim. Large dollar claims may be made against the employer despite the fact the employee has been paid more than an employee is entitled to strictly pursuant to the award.
Don’t put your business as risk. If you require further information please contact our Workplace Law Team