The HR/IR Solutions Guide for Small and Medium Businesses in Wollongong: What is the Difference Between Ordinary Pay and Award Pay?
Ordinary pay is the rate of pay agreed upon between the employer and the employee but must not be less than the relevant rate of pay set in the appropriate Modern Award.
The difference between the two is that the employer and an employee can form an agreement that entitles the employee to earn a greater amount than the award specifies. Therefore, in this scenario, the ordinary rate of pay will be higher than the award rate of pay. Most modern awards provide that overtime and penalties are calculated on the Ordinary pay rather than the award rate of pay.
For example, if the employer agrees to pay an employee $30.00 per hour as ordinary pay rather than $25.00 per hour as set out in the Modern Award overtime is calculated on the $30.00 per hour not the $25.00 per hour.
This can be significant for an employer.
A proper employment contract can define what is ordinary pay and if the ordinary rate of pay exceeds the rate set by the modern award the employee and the employer can set the number of hours to be worked each week before overtime kicks in.
Talk to John Morrissey about an employment contract that helps you manage the overtime and penalty costs of your small and medium business in Wollongong. The HR/IR Solutions Wollongong team can assist your business in arranging an offset agreement or an assessment of your business’s current payment structure.
