Over-Award Payments – What Do They Cover?

Many employers reward their staff by paying above the minimum award rates of pay, often in recognition of good service or as a means of attracting staff.

However, just because the employee is paid above the award does not mean that the award conditions no longer apply. The question is often asked, “I pay over the award, why do I have to pay annual leave loading, isn’t it included in the above award wage?” or “Doesn’t the above award rate of pay cover overtime/allowances, etc.?”

The answer is no. In order for the above award pay to cover such items as annual leave loading, or overtime or allowances it needs to be clearly set out in writing that this is the intention of the parties, that is, both the employer and the employee.

If you are looking to pay over the award clearly set out in the contract of employment or elsewhere in writing what the above award component is to cover. Make sure, of course, that the employee is still paid more than the award entitlements and that the overtime, allowance or annual leave loading is actually covered.