If your business employs staff under a Modern Award (Award) which provides for supervisor or leading hand allowances, you may have asked one of the following questions:
- Who is entitled to the allowance?
- How is the allowance calculated?
By way of example; Businesses operating within the Security industry, the Security Services Industry Award 2020 (Security Allowance) provides that:
17.5 Supervision allowance
The employer of an employee who is required to supervise other employees must pay the employee a supervision allowance according to the number of employees supervised as follows:
(a) 1 to 5 employees—$36.74 per week; or
(b) 6 to 10 employees—$42.40 per week; or
(c) 11 to 20 employees—$55.03 per week; or
(d) Over 20 employees—$64.95 per week.
Who is entitled to the allowance?
Determining which employees are entitled to supervisor or leading hand allowances is simple. If an employee is required to supervise or is placed in charge of other employees, they must be paid an allowance, irrespective of their classification under the relevant award. The terminologies ‘supervise’ or ‘placed in charge’ are given their ordinary meanings and are not limited to managers or senior staff, thus they include any person who is required to oversee the productivity and/or actions of one or more other staff members.
Modern Awards (Awards) are to be read at ‘face value’. The Fair Work Commission (FWC) has indicated that the correct interpretation in determining the number of employees a supervisor/leading hand is in charge of, is by counting the highest number of employees a supervisor/leading hand has been in charge of at any given time during their roster, shift or working hours. This is not expressly stated in the Awards.
Using the Security Award example, an employee required to supervise more than 20 employees will be entitled to an allowance of $64.95 for the week, even if the supervisor was only required to perform such duties on a single day. The allowance is not to be calculated by averaging the number of supervised employees across an employee’s work days – i.e. if the employee works five days a week and supervises 20 employees on only one of those days, the employer may not average the number of supervised employees to be 4 per day. Likewise, if the employee supervises 1 employee for four days, and 10 employees on one day, the employee will be entitled to an allowance of $42.40 for that week (10 employees).
The allowance amount is calculated as a percentage of the ‘standard rate’ defined under the relevant Award, and is generally a classification nominated by the FWC (refer to the Award’s Schedule). Thus, this amount will fluctuate as the FWC increases or decreases the standard rate over time.
If you have any questions in relation to allowances, Modern Awards or employment generally, please do not hesitate to contact us.