The rules surrounding when to pay employees their wages is a frequent area of confusion for employers and can be difficult to decipher! That’s why we have created a breakdown of frequently asked questions.
Paying Wages Frequency
The Fair Work Act 2009 details that employees must be paid in full relating to work performed at least monthly. However, employees covered by a modern award may have more restrictive requirements when wages must be paid, so the applicable award should always be consulted when determining the frequency of payments.
Generally, as employers can choose whether to pay employees weekly, fortnightly, or monthly it may be a good idea to state in the employee’s contract of employment that the frequency of payments can change.
Payment of Wages Date
There is nothing specific within legislation (or modern awards) that deals with how soon after a pay cycle is complete should the employee’s wages be paid.
As the legislation is more concerned with the frequency of the payment, this could be taken that the payment date must occur within the next pay cycle; however, the chosen payment date must remain consistent throughout all pay cycles. In other words, if the employee is paid weekly, the payment date should fall within the week after the pay cycle is complete.
If the usual payment date falls on a public holiday, it would be common practice to process the pay cycle on the next working day after the public holiday. This is so that employees are not accidentally over or underpaid for the work performed.
The Fair Work Act 2009 requires that employees are provided a pay slip within one working day of paying the employee.
There is confusion if the time limit runs from when the employer sends the funds to the employee, or when the employee receives the payment; however, as the legislation does not specifically state when the time limit begins, the best practice would be to err on the side of caution and provide the payslip within one working day of processing the payment.
Most modern awards require that employees’ final pay is made no later than seven days after the day on which the employment terminates. If an award does not specify, the Fair Work Ombudsman’s guidance is that “it is best practice for an employee to be paid within 7 days of their employment ending”.
The bottom line
Time limits for paying employees doesn’t have to be a complicated issue if all the right measures are in place. If you want to discuss how we can help with your payroll, feel free to contact us to arrange a meeting or book in online here.