Most employment issues on farms don't occur because employers intend to get things wrong. They usually arise because businesses grow and change, employment arrangements are not reviewed regularly, or workplace obligations become more complex over time.
The Pinion Advisory People and Succession team regularly works with farming businesses on Farm HR and compliance. Here are four common employment issues farm employers should be aware of and practical steps to help avoid them.
Annualised wages require regular review
Annualised wage arrangements can provide certainty for both employers and employees. However, they are not a "set and forget" solution.
Changes in workloads, seasonal demands, overtime patterns and employee responsibilities can all affect whether a salary continues to adequately compensate an employee for the work they perform.
Employers should maintain accurate time records and regularly review actual hours worked against the assumptions underpinning the salary arrangement. Reviews are particularly important following wage increases, classification changes or significant changes to work patterns.
Importantly, the Pastoral Award requires annualised wage arrangements to be reviewed annually. Employers may also need to make top-up payments where employees work above agreed overtime limits within a pay period.
To learn more about annualised wage requirements under the Pastoral Award, see section 17: Annualised wage arrangements.
Review long-term casual arrangements
Casual employment provides valuable flexibility in agriculture, particularly where labour needs fluctuate throughout the year.
However, employers should regularly review casual arrangements that have become ongoing, regular and predictable.
Where a casual employee consistently works the same hours over an extended period, a part-time or full-time arrangement may better reflect the needs of both the employee and the business.
Regular reviews can improve workforce stability, support employee engagement and help employers meet their Fair Work obligations.
Learn more about casual employment and casual conversion requirements through the Fair Work Ombudsman website.
Employee classification matters
Correct employee classification is one of the foundations of effective payroll management.
The Pastoral Award includes a range of classification levels based on an employee's skills, experience, responsibilities and the nature of the work they perform. Using the wrong classification can result in employees being incorrectly remunerated.
Classification should be considered when making new appointments and reviewed as roles evolve. Comparing position descriptions against actual duties can help ensure employees are recognised and paid appropriately for their contribution.
For broadacre farming and livestock operations, employees who are new to the industry may remain at the FLH1 classification level for up to six months. As employees develop skills, experience and responsibility, higher classifications may apply.
It is also important to use the correct classification stream for the type of operation. Different classifications apply to feedlot, dairy, poultry, pig and shearing enterprises.
Employers should refer to the Pastoral Award to determine the most appropriate classification for each role.
Flat rates can become expensive during busy seasons
Flat hourly rates remain one of the most common pay structures used across farming businesses.
While a single rate can simplify payroll administration, it may not adequately account for overtime, weekend work and other Award entitlements during peak periods such as seeding, harvest and shearing.
Many flat rates that appear suitable during quieter periods may no longer cover Award obligations when employees begin working extended hours.
Before implementing a flat-rate arrangement, employers should consider the number of hours employees are likely to work across the season and ensure the rate is sufficient to compensate employees for all relevant entitlements.
The example below highlights how quickly pay obligations can increase for an experienced FLH5 employee working seven 11-hour days in a week.
Description |
Full-Time FLH5 |
Casual FLH5 |
|---|---|---|
| Pay rates | ||
| Ordinary Rate | $27.55/hr | $34.44/hr |
| Mon-Sat Overtime Rate | $41.33/hr | $ 48.21/hr |
| Sunday Rate | $55.10/hr | $ 61.99/hr |
| Hours worked | ||
| Ordinary Hours | 38 | 38 |
| Mon-Sat Overtime Hours | 28 | 28 |
| Sunday Hours | 11 | 11 |
| Total Hours Worked | 77 | 77 |
| Required pay rate | ||
| Ordinary Pay | $1,046.90 | $1,308.72 |
| Mon-Sat Overtime Pay | $1,157.24 | $1,349.88 |
| Sunday Pay | $606.10 | $ 681.89 |
| Total Weekly Pay | $2,810.24 | $3,340.49 |
| Equivalent Flat Hourly Rate | $36.50/hr | $43.38/hr |
This example demonstrates that the flat hourly rate required to meet Award obligations can increase significantly when substantial overtime is worked.
Take a proactive approach
Managing employment arrangements should be an ongoing process rather than a one-off task.
Regular reviews of pay structures, classifications and employment arrangements can help reduce compliance risks, provide greater certainty for employees and support the long-term success of the business.
Whether you're reviewing existing employment arrangements or planning for the season ahead, taking a proactive approach today can help prevent issues tomorrow.
To learn more, consider attending our upcoming Farm HR: Creating Employers of Choice online workshop series or contact the Pinion Advisory People and Succession team for support.
Dee Heinjus
Consultant – People & Succession