Document roles and responsibilities in position descriptions
	Clarify roles and responsibilities for all people working on the farm by creating position descriptions. To accurately determine the correct job category, there are descriptions in the tackling pay rates faq sheet (see pg 2).

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Types of pay

Pay for ordinary hours

The Pastoral Award 2010 specifies ordinary hours as being 152 hours over a consecutive four-week period. 

Under the federal industrial laws, the ordinary hours are 38 per week for full-time employees and less than 38 for part-time employees.

Ordinary hours of work is an important concept in remuneration, because it is often used to calculate the various leave entitlements and termination payments. Ordinary pay for your employee may be the minimum award rate or federal or state (WA) minimum wage or an agreed higher rate.

Unlike many other awards, the Pastoral Award does not provide for penalty rates for work on weekends or outside of standard working hours. Overtime payments involve an additional percentage of the ordinary rate of pay to compensate the employee for working in excess of ordinary hours. Work on Saturdays and Sundays is only paid at the overtime rate ONLY once 152 hours have been worked in a 4 week period.

Read our overtime and ordinary hours fact sheet which explains how overtime can apply over a 4 week period (inc example rosters).

Employers and employees can negotiate a workplace agreement or an Individual Flexibility Agreement (IFA) which allows for the payment of a flat rate of pay for all hours worked, regardless of the day of the week providing the employee is better off overall than they would have been if they had been paid the award rate of pay plus overtime. 

Employers and employees can negotiate a workplace agreement or an Individual Flexibility Agreement (IFA) which allows for the payment of a flat rate of pay for all hours worked, regardless of the day of the week providing the employee is better off overall than they would have been if they had been paid the award rate of pay and the penalty rate. 

Read more about workplace agreements or an IFA 

Agreements to pay a flat rate could breach the award
	Any agreement, other than a formal workplace agreement or an individual flexibility agreement, to pay a flat rate of pay for all hours worked regardless of award entitlements, will be a breach of the award and can lead to a claim for underpayment of wages and prosecution of the employer. Download the IFA letter of offer

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Allowances

Allowances are usually paid to employees to compensate them for suffering a particular hardship or disadvantage at work, such as very hot conditions, or for work-related expenditures, such as travel and accommodation. Other allowances are paid for particular skills or responsibilities (e.g. first-aid allowances). Awards set allowances and these are updated each year on 1 July.

In some circumstances, it may be more straightforward to work out a package for full-time employees that includes a flat rate of pay taking into account overtime and penalty rates. As this is a variation to the award, the employer and employee must agree to the pay rate as part of an Individual Flexibility Agreement (IFA) or an enterprise agreement. 

IFAs and enterprise agreements must pass the Better Off Overall Test (BOOT) to ensure that the employee is better off overall compared with the award. You might also like to consider annualised wage or salary (see section above).

Flat pay rate calculator (updated June 2019)

Use the flat rate calculator (updated - excel spreadsheet) to work out the hourly flat rate that takes into account overtime and penalty rates.

How to use the flat pay rate calculator...

1. Enter the minimum hourly rate for the position, based on the classification.
2. The number of ordinary hours is already entered. It is assumed to be 38 hours as specified in the Pastoral Award 2010.
3. Enter the overtime hours.
4. Enter any hours worked on Sundays that were after the employee had exceeded 152 hours within a 4-week period.
5. Enter number of hours and days rostered to work on public holidays over 12 months.
6. The average hourly rate will be calculated. This rate is the minimum that needs to be paid to pass the BOOT test.

Here is an example of a flat rate of pay ($24.73), calculated using the calculator, for an employee classified as an FLH5 (Senior farm hand) at a minimum hourly rate of $21.20 (as of July 1 2019).

Consider other benefits

Once you have determined the current market rate you can then add other benefits into the equation.

For instance, the face value of a wage for a dairy farm employee may not appear to be attractive compared with other industries. However, when the total package is measured you may be surprised at its value to the employee.

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Rates for managers

Business managers will be award free provided their duties and responsibilities are greater than the FLH8 classification in the Pastoral Award 2010. The National Employment Standards apply but overtime and penalty rates do not apply as these are award entitlements. If they are going to work more than 38 hours per week, the additional hours must be reasonable

Salaries for managers are often calculated on the basis of the herd size. However, this is a guide only as greater levels of responsibilities will command a higher salary. Use a salary calculator (excel spreadsheet) as guide to work out the salary for a manager on your farm. 

Although business managers are award free, the federal employment contract template can be used to write their contract. In the contract template, change the reference to the 'relevant award' to the National Employment Standards 

Award responsibilities and entitlements apply regardless of the employee’s title

Because managers are often excluded from awards some people think that if they classify an employee as a manager they can avoid award responsibilities and entitlements. This is not the case. At law, the award responsibilities and entitlements will continue to apply to the work done by the employee regardless of the employee’s title. For example, if you look at the Pastoral Award classification FLH8 - Farm and Livestock Hand Level 8. This matches the job description for a Senior Production Manager.

Rates for trainees

A trainee is an employee undertaking a traineeship under a training contract. A training contract means an agreement for a traineeship made between an employer and an employee which is registered with the relevant State or Territory training authority. The National Training Wage Schedule (updated June 2019) contained in the Pastoral Award 2010 sets out wages for trainees.

The Fair Work Ombusdman's Pay and Conditions Tool allows you to work out pay rates, including trainees.

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Superannuation

All employers must pay superannuation for all employees, apart from the following exceptions: 

• employees paid a salary or wage of less than $450 in a calendar month;
• employees under 18 years of age and working less than 30 hours per week; or
• employees paid to do work of a domestic or private nature for not more than 30 hours a week, for example, a part-time nanny or housekeeper.

The superannuation guarantee legislation requires employers to provide superannuation contributions for employees as a percentage of their ‘ordinary time earnings’. 

Note: Superannuation is only paid on ordinary time earnings. The taxation laws make a distinction between ordinary hours and overtime hours and superannuation is not payable on overtime if it can be ‘separately identified’ from ordinary hours. 

However, if you are paying a flat rate of pay and formalising this by using an IFA whereby the overtime hours are rolled up in the calculation of the flat rate of pay, then the overtime hours are not considered by the ATO to be ‘separately identifiable.’ This means that you have to pay superannuation on all hours worked. Read about IFAs

Individual Flexibility Agreements and overtime
	If you pay a flat rate of pay and have an Individual Flexibility Agreement in place, you do not have to pay superannuation on the overtime component provided the Individual Flexibility Agreement has clear words identifying the overtime component. This IFA template has the appropriate clause.

In the 2014-15 Federal Budget, the government announced changes to the schedule for increasing the super guarantee (SG) rate to 12%. 

Theses amendments to the legislation mean the rate will remain at 9.5% until 30 June 2021, increasing by 0.5 percentage points each year until it reaches 12% (see table: source ATO)

This amount must be paid to the superannuation provider at least every quarter and a record kept of all contributions made. 

Want more? Visit the Australia Tax Office's guide to super for employers and small business superannuation clearing house

Superannuation payments must be made to a complying superannuation fund or Retirement Savings Account (RSA). Employees now have the right to choose which superannuation fund or RSA will receive their superannuation guarantee contributions. It is a good idea to have a complying ‘default’ fund chosen for workers who don’t have a preference for the lodgement of their contributions.  

The Pastoral Award 2010 provides a list of complying ‘default’ funds in clause 22.4 (see pg 25, Pastoral Award 2010) for workers who don't have a preference for the lodgement of their contributions. 

Definition of an employee for superannuation purposes
	The definition of an employee for superannuation purposes is different to the common law definition of employee. Some contractors you use on the farm may be included

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Introduction

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