Dreading Overtime Costs?
July 15, 2024
Dreading overtime costs? When you are a generous and supportive employer, you don’t need to pay twice.
A common myth is that when you pay an hourly rate above the award, the penalties and overtime are calculated on the contractual hourly rate. In other words, if I agree to pay you $40 / hour and you work overtime the overtime rate is $60 for the first 2 hours and then $80 for the hours after that.
But if you have the right language in the employment agreement and you use a Better Off Overall Test that’s not the way it works. You can still pay the $40 in many cases.
A better off overall test is a requirement when creating an individual flexibility agreement for employees. We use this tool to determine whether the proposed change to an employee’s terms and conditions of employment will leave the employee better off overall than they were before the change. For example, proposed changes to hours or pay against the minimum terms and conditions in the relevant award.
The purpose of the test is to ensure that employees are not disadvantaged by changes, and they are not coerced into accepting the changes that are not in their best interests. The test typically involves an assessment of the overall impact of the proposed changes on the employee against the minimum terms in the relevant award.
The employer will need to have written evidence that the proposed changes are beneficial to the employee, with a written agreement between both parties. A regular review of the better off overall test is also recommended, to ensure the employee continues to be better off as Award rates or conditions change.
We are here to help and support you with any queriers relating to the better off overall test. Call us on +1 300 474 672 or send us an email if you need help.
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