Changing pay periods

Q&A

Changing pay periods

For a variety of reasons (including easier administration), employers sometimes wish to change the pay periods applicable to their employees. There are some simple points to note.

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For a variety of reasons (including easier administration) employers sometimes wish to change the pay periods applicable to their employees. There are some simple points to note.
 
A question to WorkplaceInfo highlighted the issues.
 
Q  Our company employs approximately 20 staff, comprising full-time, part-time and casual employees who are located at our premises in Victoria.
 
Their conditions of employment are covered under a pre-reform federal award. Currently, all staff are paid weekly as per their individual contract of employment.
 
The company wishes to change the incidence of payment of wages from weekly to fortnightly, effective from 1 July 2009.
 
Can the company change the period of payment of wages, and is there any period of notice required to be given to employees of this change?
 
The source of an employer’s obligation with respect to the time and method of payment of wages is usually determined by the applicable industrial instrument or, in the absence of an industrial instrument, the relevant state or territory employment legislation.
 
Section 16 of the federal Workplace Relations Act provides that a state or territory law dealing with the frequency of payment of wages will continue to apply.
 
Check industrial instrument
 
Most industrial instruments and payment of wages laws allow the employer to pay weekly, fortnightly or monthly, although any change from weekly or fortnightly payment of wages may require the agreement of the majority of the employees in the establishment.
 
For example, Cl.5.11.1 of the Metal, Engineering and Associated Industries Award 1999 (a pre-reform federal award) provides that wages shall be paid weekly or fortnightly (or monthly by agreement); whereas, cl.18.1.2 of the Clerical and Administrative Employees (Victoria) Award 1999 provides that by agreement between the employer and the majority of employees in the relevant enterprise, wages may be paid fortnightly or monthly.
 
Facilitative clauses
 
Modern awards (operative from 1 January 2010) will contain a ‘facilitative’ clause, which will allow the employer to change the payment of wages provisions with the agreement of either the majority of employees in the establishment or an individual employee.
 
Notice
 
Ordinarily, an industrial instrument is usually silent on the amount of notice necessary to implement any change to an employee’s pay period, although a month’s notice would usually be regarded as sufficient notice in most circumstances.
 
Source: Paul Munro, IR Consultant.
 
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