The People in Dairy
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Pay rates from 1 July 2016 (updated)

Tackling pay rates
This page pulls together the most requested information from the Employment & Reward section, but should not be viewed in isolation. A person working on your farm may be engaged as an employee, a family member, an independent contractor or a share farmer. How they are engaged will determine which laws apply to the working relationship, especially in regard to minimum entitlements in the National Employment Standards (NES) - download our tackling pay rates help sheet

Determine employee classification

All award employees, should be given a classification which accurately reflects their skills and experience and the work allocated to the employee. As a minimum, wages or salary paid to the employee should meet award rates of pay which apply to the particular classification.

Find the right employee classification in the Pastoral Award 2010 

There are 5 dairy employee classifications in the award - download the tackling pay rates help sheet (see pg 2) for information about each classification and job category.

Training level is an indication only
Note: the training level shown is an indication of what to expect for each job classification. It is not a requirement for inclusion in a classification or determining pay rates. Pay rates can only be determined using the award classifications.

Find the minimum hourly rate

Find the minimum hourly rate for the employee classification. 

Reminder: as of 1 July 2014, transitional pay rates no longer apply.  

As of 1 July 2014, the pay rates in the Pastoral Award 2010 apply to all national system employers across Australia, regardless of award coverage prior to 1 January 2010. 

The following table has the pay rates which apply from 1 July 2016

Classification Weekly rate 

Hourly rate
FLH1 $672.70 $17.70
FLH3 $702.00 $18.47
FLH5 $731.50 $19.25
FLH7 $783.30 $20.61
FLH8 $841.50 $22.14

In WA? Pay rates depend on how you run your business - read WA state industrial laws & pay rates

Looking for previous pay rates? Contact us

Junior wages

Age of employee % of relevant
adult rate
Under 16 years of age 50
16 years of age 60
17 years of age 70
18 years of age 80
19 years of age 90
20 years of age 100

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Is the employee full time, permanent part time or casual?

Employees may be engaged as permanent full-time employees, permanent part-time employees, casual employees or seasonal employees. It is important to understand the difference between these different categories as the various entitlements and responsibilities are different for each category. 
Employees who work similar hours each week
You must be wary when employing casuals, as employees who work similar hours each week, which are known in advance, should be hired as permanent employees, either full time of part time and paid the various entitlements such as sick leave and annual leave.

Hours of work, minimum hours and casual loading

Under the Pastoral Award 2010, ordinary hours are 152 hours worked over a four-week period, regardless of whether they fall on a weekend. Ordinary hours for casuals are the same as for full-time employees.

There are minimum hours of work for all part-time and casual employees. For part-time employees the award specifies that the employer must roster the employee for a minimum of 3 hours on any shift. For casual employees the award specifies that on each occasion the casual employee attends for work they are entitled to a minimum payment of 3 hours work. A casual employee must be paid at the hourly rate plus 25%.

For more information on minimum hours and overtime rates, visit the Pastoral Award section.

Market rates v. award rates

If you want to attract the right people you need to match market pay rates. The market rate is, more often than not, above the minimum rate of pay.

Whilst an employer must comply with the minimum rates of pay that are set by awards, federal laws and state laws in WA, the actual rate of pay (as opposed to the minimum) will depend on the responsibilities and duties which are outlined in the position description (see our recruitment section), the skill level and experience that the employee demonstrates in the job, and the current market rates being paid on other farms and in other industries for similar skills and abilities. 

Consider conditions when comparing pay
When comparing market rates, it is important to compare similar conditions. For example, many dairy staff are employed on a casual basis, which means that in addition to their ordinary rate of pay they, are paid a casual loading of 25% so their rates can appear high compared with someone who is employed part time or full time.
Document roles and responsibilities in position descriptions
Clarify roles and responsibilities for all people working on the farm by creating position descriptionsTo accurately determine the correct job category, there are descriptions in the tackling pay rates faq sheet (see pg 2).

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Types of pay

Pay for ordinary hours

The Pastoral Award 2010 specifies ordinary hours as being 152 hours over a consecutive four-week period. 

Under the federal industrial laws, the ordinary hours are 38 per week for full-time employees and less than 38 for part-time employees.

Ordinary hours of work is an important concept in remuneration, because it is often used to calculate the various leave entitlements and termination payments. Ordinary pay for your employee may be the minimum award rate or federal or state (WA) minimum wage or an agreed higher rate.

Overtime pay

Unlike many other awards, the Pastoral Award does not provide for penalty rates for work on weekends or outside of standard working hours. Overtime payments involve an additional percentage of the ordinary rate of pay to compensate the employee for working in excess of ordinary hours. Work on Saturdays and Sundays is only paid at the overtime rate ONLY once 152 hours have been worked in a 4 week period.

Read our overtime and ordinary hours fact sheet which explains how overtime can apply over a 4 week period (inc example rosters).

Employers and employees can negotiate a workplace agreement or an Individual Flexibility Agreement (IFA) which allows for the payment of a flat rate of pay for all hours worked, regardless of the day of the week providing the employee is better off overall than they would have been if they had been paid the award rate of pay plus overtime. 

Accumulating hours of overtime
Most farms have a seasonal variation in workload. It is difficult to provide consistent hours of work for employees every week of the year. Accumulating hours of overtime as a time in lieu is permitted by the Pastoral Award 2010, instead of paying them out. This can be valuable for some award employees at the quieter times of the year, to give them a long weekend or days off to pursue interests off farm.

Pay for public holidays

Payment for working on public holidays is called a penalty rate. The Pastoral Award 2010 specifies payment of double time for all work on public holidays in the dairy industry.

Pay the correct rate on public holidays

Only one penalty applies at the one time. If a public holiday falls when an employee is on overtime - you pay the public holiday rate (200%) on the base rate, not the overtime rate.

Employers and employees can negotiate a workplace agreement or an Individual Flexibility Agreement (IFA) which allows for the payment of a flat rate of pay for all hours worked, regardless of the day of the week providing the employee is better off overall than they would have been if they had been paid the award rate of pay and the penalty rate. 

Read more about workplace agreements or an IFA 

Agreements to pay a flat rate could breach the award
Any agreement, other than a formal workplace agreement or an individual flexibility agreement, to pay a flat rate of pay for all hours worked regardless of award entitlements, will be a breach of the award and can lead to a claim for underpayment of wages and prosecution of the employer. Download the IFA letter of offer 

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Allowances are usually paid to employees to compensate them for suffering a particular hardship or disadvantage at work, such as very hot conditions, or for work-related expenditures, such as travel and accommodation. Other allowances are paid for particular skills or responsibilities (e.g. first-aid allowances). Awards set allowances and these are updated each year on 1 July.

Provision of wet weather clothing

The Pastoral Award 2010 has an allowance which requires the employer to provide wet weather clothing and footwear in certain circumstances. The clothing and footwear provided by the employer remains the property of the employer.

Building a package to attract the right person

Once you have determined the relevant minimum amounts of remuneration required by law and any other benefits which you may be able to provide you can begin to work out a package.

In some circumstances it may be more straightforward to work out a package for full-time employees that includes a flat rate of pay taking into account overtime and penalty rates. As this is a variation to the award, the employer and employee must agree to the pay rate as part of an Individual Flexibility Agreement (IFA) or an enterprise agreement. IFAs and enterprise agreements must pass the Better Off Overall Test (BOOT) to ensure that the employee is better off overall compared with the award.

Flat pay rate calculator (updated - from July 1 2016)

Use the flat rate calculator (updated - excel spreadsheet) to work out the hourly flat rate that takes into account overtime and penalty rates.

How to use the flat pay rate calculator...

  1. Enter the minimum hourly rate for the position, based on the classification.
  2. The number of ordinary hours is already entered. It is assumed to be 38 hours as specified in the Pastoral Award 2010.
  3. Enter the overtime hours.
  4. Enter any hours worked on Sundays that were after the employee had exceeded 152 hours within a 4-week period.
  5. Enter number of hours and days rostered to work on public holidays over 12 months.
  6. The average hourly rate will be calculated. This rate is the minimum that needs to be paid to pass the BOOT test.

Here is an example of a flat rate of pay ($23.01), calculated using the calculator, for an employee classified as an FLH5 (senior farm hand) at a minimum hourly rate of $1 (as of July 1 2016).

Consider other benefits

Once you have determined the current market rate you can then add other benefits into the equation.

For instance, the face value of a wage for a dairy farm employee may not appear to be attractive compared with other industries. However, when the total package is measured you may be surprised at its value to the employee.

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Rates for managers

Business managers will be award free provided their duties and responsibilities are greater than the FLH8 classification in the Pastoral Award 2010. The National Employment Standards apply but overtime and penalty rates do not apply as these are award entitlements. If they are going to work more than 38 hours per week, the additional hours must be reasonable

Salaries for managers are often calculated on the basis of the herd size. However, this is a guide only as greater levels of responsibilities will command a higher salary. Use a salary calculator (excel spreadsheet) as guide to work out the salary for a manager on your farm. 

Although business managers are award free, the federal employment contract template can be used to write their contract. In the contract template, change the reference to the 'relevant award' to the National Employment Standards 

Award responsibilities and entitlements apply regardless of the employee’s title
Because managers are often excluded from awards some people think that if they classify an employee as a manager they can avoid award responsibilities and entitlements. This is not the case. At law, the award responsibilities and entitlements will continue to apply to the work done by the employee regardless of the employee’s title. For example, if you look at the Pastoral Award classification FLH8 - Farm and Livestock Hand Level 8. This matches the job description for a Senior Production Manager.

Rates for trainees

A trainee is an employee undertaking a traineeship under a training contract. A training contract means an agreement for a traineeship made between an employer and an employee which is registered with the relevant State or Territory training authority. The National Training Wage Schedule contained in the Pastoral Award 2010 sets out wages for trainees.

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All employers must pay superannuation for all employees, apart from the following exceptions: 

  • employees paid a salary or wage of less than $450 in a calendar month;
  • employees under 18 years of age and working less than 30 hours per week; or
  • employees paid to do work of a domestic or private nature for not more than 30 hours a week, for example, a part-time nanny or housekeeper.

The superannuation guarantee legislation requires employers to provide superannuation contributions for employees as a percentage of their ‘ordinary time earnings’. 

Note: Superannuation is only paid on ordinary time earnings. The taxation laws make a distinction between ordinary hours and overtime hours and superannuation is not payable on overtime if it can be ‘separately identified’ from ordinary hours. 

However, if you are paying a flat rate of pay and formalising this by using an IFA whereby the overtime hours are rolled up in the calculation of the flat rate of pay, then the overtime hours are not considered by the ATO to be ‘separately identifiable.’ This means that you have to pay superannuation on all hours worked. Read about IFAs

What are ordinary time earnings?

Ordinary time earnings are specifically defined in the superannuation guarantee legislation. For example, overtime, accrued annual leave, long service leave and sick leave paid as a lump sum on termination are not defined as ordinary time earnings and therefore no superannuation contribution needs to be made when paying out these amounts. Read the full list of ordinary time earnings

Individual Flexibility Agreements and overtime

If you pay a flat rate of pay and have an Individual Flexibility Agreement in place, you do not have to pay superannuation on the overtime component provided the Individual Flexibility Agreement has clear words identifying the overtime component. This IFA template has the appropriate clause.

In the 2014-15 Federal Budget, the government announced changes to the schedule for increasing the super guarantee (SG) rate to 12%. 

Theses amendments to the legislation mean the rate will remain at 9.5% until 30 June 2021, increasing by 0.5 percentage points each year until it reaches 12% (see table: source ATO)

 Date  Super rate guarantee
 1 July 2002 – 30 June 2013                      9%             
 1 July 2013 – 30 June 2014
 1 July 2014 – 30 June 2015
 1 July 2015 – 30 June 2016
 1 July 2016 – 30 June 2017
 1 July 2017 – 30 June 2018
 1 July 2018 – 30 June 2019
 1 July 2019 – 30 June 2020
 1 July 2020 – 30 June 2021
 1 July 2021 – 30 June 2022
 1 July 2022 – 30 June 2023
 1 July 2023 – 30 June 2024
 1 July 2024 – 30 June 2025
 1 July 2025 – 30 June 2026 and onwards

In addition, as of 1 July 2013 the upper age limit of 70 years for superannuation guarantee has been removed, which means that superannuation guarantee must be paid for workers over 70 years of age, providing the other exemptions listed above do not apply.

This amount must be paid to the superannuation provider at least every quarter and a record kept of all contributions made. 

Want more? Visit the Australia Tax Office's guide to super for employers and small business superannuation clearing house

Superannuation payments must be made to a complying superannuation fund or Retirement Savings Account (RSA). Employees now have the right to choose which superannuation fund or RSA will receive their superannuation guarantee contributions. It is a good idea to have a complying ‘default’ fund chosen for workers who don’t have a preference for the lodgement of their contributions.  

The Pastoral Award 2010 provides a list of complying ‘default’ funds in clause 22.4 (see pg 25, Pastoral Award 2010) for workers who don't have a preference for the lodgement of their contributions. 

Definition of an employee for superannuation purposes
Trap The definition of an employee for superannuation purposes is different to the common law definition of employee. Some contractors you use on the farm may be included

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