What is a weeks pay?

The media often publishes articles with “scandalous wage theft” headlines. In many cases this is not a deliberate attack on staff entitlements, but it does pose the question, how can it be so wrong?

People might respond with the “industrial Relations framework in Australia is too complex”, which is often rebutted with “it can’t be too hard to pay people their entitlements”.

Of the hundreds of Awards, Enterprise Agreements, and Acts that make up the industrial relations framework in Australia, I’d like to pose one simple question, “What is a weeks’ pay?”

Consider for a moment employee A.

A has just been made redundant, and the company is prepared to pay A in lieu of notice, rather than expecting A to work the notice period.

A is paid fortnightly, and at the end of the first week was cleared from a workers compensation claim. A then worked the second week of the fortnight (we’ll assume the Payroll Team has had the Workers Compensation clearance communicated to them in plenty of time!).

A is a long serving employee, and aged over 45, so is entitled to 5 weeks pay in lieu of notice, and 12 weeks Long Service Leave, and is also entitled to 3 weeks of accrued Annual Leave.

The accrued Annual Leave weeks MIGHT attract 17.5% leave loading, but if A was scheduled to work ordinary hours during an afternoon shift, night shift, Saturday shift or Sunday shift, then the leave loading MIGHT be the greater of 17.5% on ALL hours, or the penalty rates applicable to those shifts (depending on the award or agreement).

A weeks pay for “in lieu of notice” INCLUDES loadings, penalties, allowances, and overtime that A would have been paid had they stayed at work.

A weeks pay for “redundancy” purposes is A’s base pay rate times the ordinary hours worked, and specifically EXCLUDES loadings, penalties, allowances and overtime (but if A worked variable ordinary hours, a further calculation would need to be done to determine the average hours).

A weeks pay for Long Service Leave needs a separate calculation (and is a different calculation in every state and territory in Australia, complicated by employment type, leave without pay taken, breaks in service, and periods of overseas or interstate service).

A weeks pay for Workers Compensation is also a different calculation, and this too differs in most states and territories in Australia.

And A’s last weeks pay is likely to be based on the hours worked during that week, including penalties, allowances and overtime, but may differ from the in lieu of notice payments which are calculated on what A was expected to work for the next 5 weeks.

So, our friend employee A is a recently redundant employee who is receiving:

1.??????Payout of accrued Annual Leave and Leave Loading

2.??????Long Service Leave

3.??????In Lieu of Notice

4.??????Redundancy payments

5.??????Workers Compensation

6.??????and their final weeks wages

and there are 6 different amounts for what each “weeks pay” is.

Some of those payments attract superannuation contributions, and some do not.

Some of those payments attract additional leave accruals, and some do not.

Some of those payments are taxed concessionally, and some are not.

Some of those payments are tax free, and some are not.

And that is one pay for employee A.

Australian Payroll Association

Access the downloadable pdf to see our training brochure https://www.austpayroll.com.au/wp-content/uploads/2022/09/APATrainingBrochure.pdf

#payroll #payrollservices #payrollcompliance #weekspay