Giving your staff a raise
There’s a number of reasons why you might give your staff a pay rise, not only to reward and recognise their contributions to your practice. Employers might decide to increase employees’ rates of pay for several reasons, such as:
- a custom and practice of passing on the 1 July increase to staff despite them receiving an above Award rate of pay (e.g. the recent 1 July 2.5 per cent increase detailed in the 2021-2022 Annual Wage Review Decision);
- to reward and recognise the employee for their performance or service to the medical practice;
- to comply with the Modern Award by:
- paying the employee the new Modern Award hourly rate of pay as at 1 July 2021 (i.e. the 2.5 per cent increase in the 2021-2022 Annual Wage Review Decision);
- reclassifying the employee as per the Modern Award (e.g. Support Services Employee Level 7 to 8); and
- progressing the employee through the pay points at a given level in the classification structure (e.g. SSE Level 7 pay point 1 to pay point 2).
We encourage our members to align their decision to increase pay with organisational goals. Some questions you might ask yourself are:
- Do you want to encourage high performance?
- Do you want to recognise loyalty to the practice?
- Is the driving force for a pay rise retention of staff?
- Do you need to reclassify your staff or progress them through the pay points? Or both?
In this edition of the Award Subscription Service, we will focus on classifications under the Modern Awards.
Award-prescribed minimum rates of pay correspond with the classification befitting the core competencies, responsibilities and qualifications the employee is required to have in their position. We find employers and their managers are often surprised when we explain that the practice is not required to change the classification of the position held by the employee to increase their pay.
To be award compliant, employers are best to assign a classification to an employee, which accurately reflects the work the employee is required to perform. If the classification chosen is too low and the employee is mistakenly paid below the minimum Modern Award rate assigned to that classification, this can give rise to an underpayment claim. This claim can be significant, as the limitation period for underpayment of wages claims is six years from the date of first contravention.
However, we acknowledge many of our members pay staff above Award rates of pay so this issue is unlikely to eventuate but it is still a risk that you can mitigate by ensuring staff are correctly classified.
Similarly, if the classification assigned to the position is too high, and does not reflect the requirements of the position, this can cause rigidity and could for example, stall plans for expansion of the practice.
Take a look at this scenario as an example.
Think of your practice currently, you have a Practice Manager classified under the Health Professional and Support Services Award 2020 (HPSS Award) as a Support Services Employee (SSE) Level 9 but really, her correct classification is SSE Level 7 under the HPSS Award.
The practice is growing exponentially and you now have 10 administrative staff instead of two. You have identified a need for a Practice and Operations Manager, HPSS Award classification SSE Level 9, who has experience managing large, complex teams but the core responsibility in this position will be overall management of administration.
If the Practice and Operations Manager is going to manage the Practice Manager, how will this work if their classification is the same classification (SSE Level 9) as the Practice Manager, whom they are to manage?
It could present significant issues, e.g. an unfair dismissal risk. The Practice Manager could state that by introducing the Practice and Operations Manager, you have replaced their position because the two positions have the same classification, SSE Level 9. Ultimately, it might mean you decide against employing a Practice and Operations Manager due to this risk and stall your plans to effectively respond to the expansion of your practice.
This situation could have been avoided, had you classified your current Practice Manager correctly, as an SSE Level 7, and you could clearly show the difference between the two positions.
The lesson here disconnect pay increases from reclassifications of the positions held by staff. Provided employers pay the staff member the minimum rate of pay corresponding to the classification (and if applicable, the pay point) of the position, your pay rate obligations under the Award are satisfied.