Award pay points – How do they work?

Many modern awards provide pay points for the classifications set out in the award. 

In this article, we provide a step-by-step guide to assist employers in determining the pay point applicable to their employees.

Step 1
The first step is to determine the classification of the role under the award.  This can be a difficult assessment as the classification descriptions are unlikely to fit exactly with the tasks of the role.  What employers need to do is assess the award classifications and determine which classification best describes the duties and responsibilities of the role. 
 
This classification is only of the role and will not change.

Step 2
Step two is to determine the pay point under the award.  Pay points are pay rate increments within the classification.  Pay points will apply to the employee who holds the role. They are not linked to the role like classifications, and they may vary depending on the employee who holds the role.  For example, an employee who commences a role with little or no experience will likely start at the lowest pay point.  However, someone who has experience and commences a role may start at a higher pay point. 

As an employee develops skills and remains employed, they will progress through the pay points.  Full-time employees generally progress to the next pay point following completion of 12 months’ service.

Pay point progression will stop once the maximum pay point is reached. 

Why are there pay points?
Pay point progression rewards employees for skill development and length of service while they remain performing the same role.  It is an incentive for employees to develop their skills and remain in the same role.

Why do I need to worry about pay points?
It is crucial that pay points be assessed, as not paying at the right pay point can lead to a claim for underpayment of award rates.

Employers also want to ensure that their employees are encouraged to develop their skills in the role they hold and pay point progression is a means of doing this.

We can help
If you have questions or concerns about your employees’ pay points or want to ensure your business is compliant with modern award obligations, get in touch by phone or email as we can assist:
Telephone: (02) 9058 4930
Email: office@ndlaw.com.au

This article was prepared by:

Disclaimer: This publication has been provided for general guidance only and does not constitute professional legal advice. You should obtain professional legal advice before acting on information contained in this article.