Everything you need to know about the Humanforce Award Interpretation Engine
)
Updated: 21st May 2024
Australia has one of the most complicated industrial relations environments in the world. There are countless rules and regulations that are enforced by the Fair Work Ombudsman to ensure that every employee is paid correctly and works in a safe environment, under at least the minimum work conditions.
Employers must comply with the industrial instruments appropriate to their business. These may take the form of modern awards or enterprise agreements (EAs), which outline the conditions of employment and entitlements based on industry, occupation, employment type, and location.
There are 121 modern awards and more than 70,000 active agreements in place, each of which can run to several hundred pages and contain clauses upon clauses of minutiae. It’s no surprise that interpreting these industrial instruments is challenging. Thankfully, technology can help employers stay compliant and ensure that employees receive the correct pay and entitlements for every shift they work.
Disclaimer: The information in this guide is relevant as at 21 May 2023. The views expressed herein offer general information only and are provided in good faith to assist employers and their employees. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete. Always seek professional legal or taxation advice.
What are modern awards?
Modern awards define the entitlements that employees are entitled to in the job they do. The applicable award depends on the industry the employee works in, or their occupation. Minimum entitlements under the relevant award depend on factors such as their employment type, their qualifications and experience, the duties they perform, and when and where they work.
Hours of work
Overtime rates
Penalty rates
Allowances
Rosters
Breaks
Leave entitlements
Pay
It’s important to note that the entitlements contained in awards and agreements must be over and above the national minimum wage and the National Employment Standards (NES). The NES are 11 minimum standards, which apply to every employee in the national workplace relations system regardless of whether they are covered by an award or registered agreement. These 11 entitlements include:
Maximum weekly hours
Flexible working arrangement requests
Parental leave and related entitlements
Annual leave
Personal/carer’s and compassionate leave
Unpaid family and domestic violence leave
Community service leave
Long service leave
Public holidays
Notice of termination and redundancy pay
Fair Work Information Statement and Casual Information Statement
Note: Casual employees may not be covered by all 11 of these entitlements due to the nature of casual employment.
Type of awards
All employees covered by the national workplace relations system may not be covered by a modern award. For example, some may be covered by a registered EA, or the industry or occupation worked in may not be covered by an award.
Examples of the current awards include:
Manufacturing and Associated Industries and Occupations Award 2020
Social, Community, Home Care and Disability Services Industry Award 2010
In addition to the 121 modern awards, a small number of enterprise and State reference public sector modern awards cover specific employers and their employees only. Read more about which award applies on the Fair Work Commission website here.
What are enterprise agreements (EAs) ?
EAs – previously known as Enterprise Bargaining Agreements (EBAs) - are negotiated between an employer, their employees and their employee’s bargaining representatives. They contain the minimum wage and working conditions that employees covered by the agreement are entitled to.
Employers can be obliged to adhere to the terms of multiple EAs, each of which can contain different rates of hourly pay, loadings, allowances and overtime.
PwC states:
“Interpreting the circumstances under which an employee is entitled to certain payments – such as overtime, penalty rates, and certain allowances – can be very complicated. Without an electronic award interpreter (software contained in all contemporary time and attendance systems that automatically calculates employee entitlements, based on hours worked), the interpretation for payment often falls to the local management or the payroll team.”
What does award interpretation software do?
As PwC states above, technology can help employers navigate through the complexity of modern awards and EAs. Once it’s correctly configured and validated, an Award Interpretation Engine – sometimes referred to as a Pay Conditions Engine – operates efficiently in the background.
The Interpretation Engine integrates with existing workforce management, HR and payroll software to automate and simplify the process of applying the rules of modern awards and EAs that are applicable to your organisation. The engine only needs alterations when awards or EAs undergo reviews to make changes in their conditions.
This ultimately results in fewer manual calculations and enhanced compliance for employers, and more accurate pay and application of entitlements for employees.
About Humanforce’s Awards & Compliance solution
Humanforce’s Awards & Compliance solution is a powerful pay conditions interpretation engine that can flexibly and securely automate thousands of unique and complex rule scenarios simultaneously.
The solution automates award and agreement calculations, leave entitlements, TOIL and complex accrual rates. It also syncs with your rostering & scheduling software and time & attendance software. The engine then compiles and formats data for direct integration with leading payroll systems, including Humanforce’s own Payroll solution. Users can also integrate with more than 100 payroll providers.
Humanforce thus offers a comprehensive solution for managing leave requests, accruals, deductions and all other rostering needs.
How can Humanforce’s Award Interpretation Engine help your business?
It can help in several ways, including:
Automatically calculating and assigning rostered and authorised hours to pay rate categories
Using pre-set conditions that set restrictions on how staff can be rostered
Providing real-time on-roster cost vs. budget management and approval thresholds
Carrying out a 'What if?’ analysis on cost and compliance for shift swaps and critical decision points relating to cost reporting and history
Compiling and formatting data for direct integration with leading payroll systems (or employers may opt to use Humanforce’s own Payroll solution)
Managing leave requests, accruals and deductions. Each award profile factors in award rules or other documented industrial instruments, like EBAs in Australia, or Collective Bargaining Agreements in New Zealand
The benefits of using the Humanforce Award Interpretation Engine
The top benefits of using the Humanforce Award Interpretation Engine include:
Automated awards interpretation
Flexibility is the key with the Humanforce pay conditions engine. Customers can use our pre-built Library Awards or use templates to build their own EA to match their own unique requirements. Hundreds of unique conditions, relating to holidays, break times, overtime, loadings and more, can be built in.
Changes to an award made by Fair Work or agreed to by employees and their employer and bargaining representatives in the case of EAs – in relation to conditions, for example – are made directly in customer accounts by the Humanforce consulting or support teams, depending on the level of complexity. Alternatively, rate changes can be handled directly by Humanforce customers.
Just as critically, the Interpretation Engine is seamlessly integrated with the wider Humanforce Workforce Management suite (including rostering & scheduling, time & attendance, leave management, and more). This allows for seamless roster to payroll service delivery, with checks and balances being done throughout this critical process to ensure compliance. It also means less likelihood of error due to a reduction data entry and the need to manually interpret awards.
In other words, the software takes the hassle out of award interpretation. With the Humanforce Award Interpretation Engine, you can confidently pay your team correctly for every shift.
The chances of being yet another headline for underpaying staff are greatly reduced.
Enhanced privacy and data protection
Employee records, including pay and banking details, can be susceptible to cyber-criminals and fraudsters if your technology partners do not have the most up to date data protections in place. Humanforce prioritises data security and compliance for its entire suite. In summary:
Compliance: In every aspect of Australian, New Zealand and global employment regulations Humanforce has endeavoured to be, and to remain, fully compliant. Humanforce is also compliant with General Data Protection Regulation (GDPR) rules on how and where to store personal data. See our Privacy Policy here.
Security: Humanforce’s commitment to the highest standard of data protection and risk management has been recognised by ISO 27001 Certification. This applies to our entire HCM suite, including workforce management, intelliHR, Payroll and Thrive Wellbeing. The certification process involved a rigorous evaluation of Humanforce's security practices, including its advanced technical controls and security-first approach to system design. Key elements such as robust access control frameworks, meticulous risk management, and unified encryption practices were assessed to ensure the highest level of security for customer data.
Cybersecurity is not ‘set and forget’. You need a technology partner like Humanforce that remains vigilant and has an evolving plan to future-proof against cyber criminals. When choosing a technology partner, it’s critical to check that they utilise security protocols that can guard against unauthorised access and detect malicious software.
Humanforce customers can be confident that their data and privacy are secure. We are the trusted partner for hundreds of organisations that value security and privacy.
Greater accuracy
Awards contain complex clauses that relate to countless aspects of employment; some of these clauses pertain to some employees and not others. Your organisation must continually apply varying conditions based on people’s roles, the work they complete and the hours in which they carry it out. The sheer volume of data means that manual interpretation is not only time-consuming but is also prone to human error.
These errors can have legal implications. At best, employers will need to make good on previous errors; at worst, there is the potential for financial penalties from government bodies such as the Fair Work Commission. Correctly configured Award Interpretation software reduces the risk of this occurring.
It’s also worth noting that modern awards undergo periodic updates and EAs are re-negotiated regularly. Staying on top of these changes can be overwhelming. Again, Award Interpretation software can help by automating the update process so there are no hidden non-compliance surprises down the track.
Major award changes can be reviewed on this Fair Work Ombudsman page.
More efficient and compliant rostering
The rostering process has traditionally been prone to error and can be extremely time-consuming, simply because operations and HR managers need to be across so many rules. However, if the Award Interpretation software applies conditions of employment to the rostering & scheduling process, this risk can be greatly reduced.
When employment condition checks are built into the rostering process, it reduces the risk of employees being rostered at the incorrect times, while ensuring they receive the correct breaks, and that all mandated entitlements are considered. Scheduling, business and work/award rules can be pre-loaded and used to automatically validate each roster.
Even better, by flagging potential problems during the rostering process, Humanforce’s Alerts and Errors feature allows you to fix them before they cause any damage. The Alerts and Errors feature can also help you to manage maximum and minimum hour requirements, annualised wage arrangements and vaccine-related requirements.
Looking ahead
The world of work continues to evolve and so too does Australia’s industrial relations landscape.
The Fair Work Commission is undertaking a modern award review throughout 2023-24 so changes are expected to flow from that. In a submission to the FWC, The Business Council of Australia (BCA) suggested that the overhaul is needed as modern awards contain outdated restrictions that no longer reflect the different way people want to work. Awards also need to be “substantially simplified”.
Specifically, the BCA noted:
Awards are complex, technical and lack clarity, which are very often not understood by both employees and employers
Underpayments are very often the result of unintended errors due to the complexity of the awards
Previous reviews have delivered only partial successes in modernising award regulation
Regardless of the outcome of this modern award review, it’s clear that a trusted technology partner can have a positive impact on compliance, pay accuracy and the workload of HR and payroll teams.
Questions to ask about your current set-up
Here are some questions from PwC to consider about whether your organisation can confidently adhere to industrial instruments like awards and EAs:
At what point in the EA/award renegotiation process is the payroll team consulted and/ or informed?
Is there a change control process in place to manage system, process, communication and changes out of EA/award changes that need to be implemented?
Do you have confidence that EAs/awards are interpreted correctly and consistently?
Do you use a Time & Attendance tool to capture employee data electronically and do you use an electronic award interpreter?
How confident are you that the hours worked by employees are being paid according to the EA/award?
About Humanforce
Humanforce is the best-in-one platform for frontline and flexible workforces, offering a truly employee centred, intelligent and compliant human capital management (HCM) suite – without compromise. Founded in 2002, Humanforce has a 2300+ customer base and over half a million users worldwide. Today, we have offices across Australia, New Zealand, and the UK.
Our vision is to make work easier and life better by focusing on the needs and fulfilment of frontline workers, and the efficiency and optimisation of businesses.
To learn more about how Humanforce can automate and streamline all aspects of people management, please contact us.
)
)
)