Classifications under industrial agreements
Once you have identified the industrial agreement that applies to your business, the next steps are to determine:
Which of your employees are covered by the industrial agreement
What classification applies to each of your employees covered by the industrial agreement
Identifying the appropriate classification for each of your employees covered by an industrial agreement is essential for ensuring that you are paying them the correct rate of pay. Significant underpayments can occur if an employee is not assigned a classification or is incorrectly classified.
There are also often penalties applicable under many industrial agreements if an employer fails to assign an employee covered by the industrial agreement a classification.
What is a classification?
An employee’s classification is effectively their job. An employee’s job is the collection of duties that they perform.
Example - Industry award
Modern Industries (WA) has negotiated an enterprise agreement with its employees, called the Modern Industries Enterprise Bargaining Agreement 2010.
There is a two-step decision process to determine whether this industrial agreement applies to a particular employee of a business:
Is my employee covered by the industrial agreement that covers my business?
An employee will be covered by an industrial agreement if their job is included within the classifications that the industrial agreement covers. Usually an industrial agreement will not apply to an employee if their job does not appear in the industrial agreement’s classifications.
The classifications themselves are found in each industrial agreement, and are not the same across different agreements. It is therefore important to pay close attention to the jobs that are and are not included in a particular agreement.
Where do I find the classifications?
Not all industrial agreements will use the word “classification” – some will use the expression “role”, while others will use the antiquated expression of “calling or callings”.
Since an employee’s classification determines what an employee is entitled to be paid, the easiest way to find the applicable classification is in the “minimum wages” clause of the industrial agreement, as this will explain what each classification is to be paid.
Clause 9 of the Modern Industries Industrial Bargaining Agreement 2010 specifies that Appendix A sets out the minimum wages for the classifications covered by the agreement, and then goes on to define them:
Each of these is a “classification”, so as an employer you need to determine which classification applies to each of your employees.
In this example, the person’s classification is Level 1, 2, 3A etc., even though their job title will be something else.
How do I identify an employee's classification?
An agreement will typically define at least some, if not all, of the classifications so that employers can identify which employees fall within it.
This might be found in the “Definitions” clause, or included in the “Wages” clause itself. Because an industrial agreement is unique to a business, the classification structure is usually based around job titles already used in the workplace.
Usually the classification structure is based around job titles already used in the workplace.
What happens if someone falls within more than one classification?
It is not uncommon for an employee to perform tasks which fall under two or more classifications; for example, a waiter who also acts as a cashier.
In this circumstance, the question to be answered is: what is the primary purpose of their employment?
Generally, the “primary purpose” of a person’s employment is determined by what they spend most of their time doing. A waiter who spends 90% of their time performing the duties of a waiter, and 10% of their time performing the duties of a cashier, will generally be classified as a waiter.
However, where the employee’s duties are nearer a 50-50 distribution between classifications, it can become harder to clearly classify them into a specific classification. In such cases, you should obtain legal advice about the specific provisions of your agreement.
What is an employee temporarily performs duties at a higher classification?
Many industrial agreements allow for employees to be paid the rate of the higher classification when they perform the duties of that role, often called a “higher duties allowance” or a “higher duties rate”. It is important to pay attention to the terms of the particular agreement to see if this applies and how it works.
Can an employee’s classification change?
An employee’s classification can change either deliberately (for example, by a promotion) or by practice.
An employee’s classification may change “by practice” if they spend the majority of the time performing duties other than in their usual role. Click the exclamation mark to see how.
What happens if an employee does not fall within a classification?
If an employee does not fall within the classification of a particular agreement, one of several things can happen:
- they could be covered by another agreement – some employers have a different agreement for each part of their business;
- they could be covered by a WA award that contains relevant classifications; or
- they could be award/agreement free.
