Understanding additional pay
Additional pay encompasses all payments beyond base wages. In Australia, many additional payments are legally mandated by awards and enterprise agreements, particularly overtime, penalty rates, and allowances. Getting these right is essential for compliance.
Mandatory additional pay
- Overtime rates
- Penalty rates
- Award allowances
- Shift loadings
Discretionary additional pay
- Bonuses
- Commissions
- Performance pay
- Discretionary allowances
Types of additional pay
- Overtime: Higher rates for hours beyond ordinary time (often 1.5x or 2x)
- Penalty rates: Higher rates for weekends, public holidays, nights
- Shift loadings: Extra pay for working certain shifts (afternoon, night)
- Allowances: Payments for specific conditions (uniforms, travel, tools)
- Bonuses: Performance-based or discretionary extra payments
- Commissions: Payments based on sales or results
- Leave loading: Extra payment when taking annual leave (often 17.5%)
Australian requirements
Legal framework
Check your award
Additional pay entitlements vary significantly between awards. Hospitality, retail, healthcare, and other industries have different rules. Always check the specific modern award that applies to your employees.
Best practices
Compliance
- Know your award requirements
- Track hours accurately
- Itemise on payslips
- Keep records for 7 years
Administration
- Use time tracking systems
- Automate calculations
- Regular audits
- Train managers on rules
Common mistakes
Incorrect overtime calculations
Calculating overtime from the wrong base rate or applying incorrect multipliers. Awards specify exactly how overtime should be calculated - including which allowances to include in the base.
Missing penalty rates
Not applying penalty rates for weekends, public holidays, or late nights. These are mandatory under most awards. Underpayment creates significant back-pay liability.
Poor payslip details
Not itemising additional payments correctly on payslips. Employees can't verify they've been paid correctly. This is also a compliance breach - payslips must show all payment components.
Key takeaways
Additional pay includes all payments beyond base wages - overtime, penalties, allowances, bonuses. In Australia, many additional payments are mandated by awards. Track hours accurately, calculate correctly, itemise on payslips, and keep records for compliance.
RosterElf's staff management helps Australian businesses track hours and calculate pay correctly with integrated time and attendance features.
