Week 6 - Wages Fixing, Modern Awards and Salary Setting

Question 1

What is an award?

Answer 1

• A legally binding document on employers in an industry which establishes minimum terms and conditions for that industry. Awards are used to benchmark against the BOOT
• There are currently 122 awards overseen by the FWC. Under the FW Act 2009, modernised awards complement the 10 NES
• have a 4 yearly review cycle

Question 2

What WAS and award?

Answer 2

• traditionally awards existed at multiple levels - Federal, state, industry, company if it was large enough
• it set the job classifications, minimum conditions and wages
• An award was handed down by the tribunal after it had been notified of a ‘dispute’ by either the employer/employer association or the union. To amend an award, you needed a paper dispute

Question 3

What are the principles of salary setting?

Answer 3

• external equity, which acknowledges that factors external to an organisation influence levels of compensation in an organisation. These factors include skill and labour shortages or oversupply and general rates of remuneration. Without external equity it is difficult to attract and retain candidates
• Internal equity - organisations have various jobs which are relative in value terms so that the values of various jobs in an organisation are comparitieve. Typically determined by job evaluation.
• Individual worth - equal work for equal pay

Question 4

Define reward management

Answer 4

• a process by which organisations distribute financial and / or other rewards to employees
• Aims include fairness and consistency, org. effectiveness and competitiveness, linkage to org. goals and employee outcomes, attracting and retaining talent

Question 5

How does an award relate to minimum wages

Answer 5

• the minimum wage and wage fixing was at the living wage for most of Australia’s history. Women’s wage was set at 54% of a man’s wage commencing the gendered pay gap
• FWC has a central role in reviewing min wages and industry awards
• penalty rates were originally to compensate employees for working outside traditional span of hours and for low paid workers it can be a means to achieve a more liveable wage. Organisations argue that it inhibits their flexibility and growth

Question 6

Different approaches to salary and benefits schemes (min wages focus)

Answer 6

• fixed and variable pay

- time based pay, results based pay, enterprise based pay, performance based pay