“Above Award” Does Not Mean Above the Law

Many employers in the vehicle industry pay employees an above-award salary or hourly rate and assume this covers everything - overtime, penalty rates, public holidays, allowances, annual leave loading and other award entitlements.

That assumption is dangerous.

Paying an employee “well above the award” does not automatically remove the employer’s obligations under the Vehicle Repair, Services and Retail Award 2020 or Clerks – Private Sector Award 2020. If the Award applies, the employee must still receive at least what they would have received under the Award for the actual work performed.

The problem is simple: many businesses set the salary once and never check it again.

That means no proper calculation, no review of overtime, no comparison against award entitlements, no records of actual hours worked and no clear evidence that the employee is actually better off. In many cases, once the actual hours, overtime, weekend work, public holidays, allowances and leave loading are properly calculated, the employee is not better off at all.

That creates an underpayment risk.

These issues often come to light after an employee resigns, is terminated, or seeks advice. By then, the business may be facing backpay, record-keeping questions, legal costs, and potential involvement and prosecution from the Fair Work Ombudsman.

Under the Fair Work Act, failing to comply with a modern award can be a civil remedy breach. In plain English, this is a fine which can become much more than a payroll correction.

The safest approach is to have a proper checking and record keeping system in place. This was made clear in the recent decision of

Fair Work Ombudsman -v- Woolworths Group Limited [2025] FCA 1092

For employees paid an all-inclusive salary or above-award rate, employers should conduct a regular reconciliation - preferably monthly, and in the case of sales persons who are in receipt of commissions, at least quarterly. This means comparing what the employee was actually paid against what they would have been entitled to under the Award for the same period.

That review should include ordinary hours worked, overtime, weekend work, public holidays, allowances, leave loading and any other entitlement the salary is intended to cover. Full and proper record keeping is essential for the review to be accurate and hold up to any scrutiny.

If the salary does not leave the employee better off, the shortfall should be corrected immediately.

If you are paying an employee an “all-inclusive” rate, salary, or above-award arrangement, ask yourself:

What award classification applies?
What entitlements is the salary intended to cover?
How was the rate calculated?
Are hours of work being recorded?
When was the arrangement last reviewed?
Can you prove the employee is better off?

If the answer is “we just pay them above award”, that is not enough.

Before assuming your current arrangements, or record keeping are sufficient for compliance, contact your ER Team at the MTA. We can review the position, the Award coverage, the employee’s actual work pattern, and help confirm whether the arrangement is compliant - before it becomes a much larger problem.