In our experience, most employment law issues do not arise from deliberate non-compliance. They develop gradually, through practical decisions made in good faith, until the arrangement no longer aligns with the legal framework.
What makes these situations particularly challenging is that they often feel entirely reasonable at the time. It is only when the arrangement is tested, whether through a dispute, audit or claim, that the underlying risk becomes clear.
Below are four of the most common areas where employers can come unstuck.
1. Assuming a role is ‘award free’ when it isn’t
One of the most frequent and costly mistakes is assuming that a role falls outside the modern award system.
Employers may consider a role to be ‘professional’ or sufficiently senior to be award free, particularly where the salary appears high relative to market expectations. However, modern awards are determined by the nature of the duties performed, the job title or salary level.
Example: An employee engaged as an Accounts Officer is paid an annual salary that the business considers competitive. However, their duties, processing transactions, reconciling accounts and managing routine financial administration, align with a modern award classification.
If the award applies, the employee may be entitled to overtime, penalty rates and allowances that have not been accounted for. Over time, this can result in significant underpayment exposure, often extending back several years.
The High Court’s decision in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd highlights a broader principle that is highly relevant in this context. Even where an arrangement is structured in a particular way, the court will look beyond form to substance. In practical terms, this means that if an employee’s duties fall within the scope of a modern award, the award may still apply, regardless of how the role is labelled or the salary paid.
2. Paying differently for the same role based on qualifications or experience
Differentiating pay based on experience, qualifications or tenure is a standard commercial practice. However, risk arises where those differences are not clearly reflected in the role itself or where employees are, in practice, performing substantially the same work.
Modern award classifications are based on duties and responsibilities, not individual attributes. While experience may justify progression within a classification, it does not necessarily justify materially different pay outcomes if the role remains unchanged.
Example: Two Marketing Co-ordinators are employed within the same team. One has 10 years’ experience and is paid at a significantly higher rate than the other who has two years’ experience. Initially, the difference reflects capability. Over time, however, both employees perform the same day-to-day tasks, with no meaningful distinction in responsibility.
In this situation, the employer may face questions such as:
- whether the higher-paid employee is effectively overclassified;
- whether the lower-paid employee should be classified at a higher level and
- whether the pay disparity can be justified if the work performed is materially the same.
There is also a broader risk where differences intersect with protected attributes, even unintentionally.
From a practical perspective, salary differences are best supported by:
- clearly defined role levels (eg junior, intermediate, senior)
- genuine differences in responsibility or accountability and
- documentation that explains the basis for the variation.
Without that structure, what begins as a reasonable commercial decision can become difficult to sustain if challenged.
3. Allowing duties to expand beyond the position description
Roles evolve over time.
Employees may take on additional responsibilities, either at the employer’s request or through their own initiative. While this can be beneficial, it can also create legal and operational complexity if not actively managed.
Example (employer-driven): An Administration Officer gradually assumes reporting, coordination and oversight responsibilities that align with a higher classification. Their remuneration, however, remains unchanged. This creates exposure to a ‘higher duties’ claim and potential backpay.
Example (employee-driven): An employee in a Technical Support role develops a strong interest in marketing and begins contributing to campaigns and content. The business supports this initiative, and over time, these activities become a regular part of their role.
This can create a more nuanced risk:
- the employee may argue their role has fundamentally changed
- the additional duties may justify a higher classification or different pay grade and
- the employer may later find it difficult to direct the employee back to their original role if business needs change.
What begins as flexibility or initiative can evolve into an expectation or perceived entitlement.
Courts will generally look at the substance of the role as it is actually performed, rather than relying solely on the written position description. This reflects the broader principle reinforced in WorkPac Pty Ltd v Rossato, that the reality of the working relationship carries significant weight.
Regular review, clear documentation and early alignment between duties and remuneration are critical in managing this risk.
4. Inconsistent or undocumented workplace practices
Many businesses operate with a degree of flexibility, adjusting hours, approving arrangements informally or offering discretionary benefits. While this can support culture and responsiveness, it can also create exposure if practices are not clearly documented or applied consistently.
Example: One employee is regularly permitted to work from home while another in a comparable role is not. Without a clear policy or rationale, this can lead to claims of unfair treatment or adverse action.
Similarly, informal arrangements, such as additional leave, flexible hours or variations to duties, can, over time, become implied terms of employment if they are consistently applied.
The difficulty for employers is that once an expectation is established, it can be challenging to change without consultation or risk.
Clear policies, consistent application and proper documentation are essential to maintaining both flexibility and control.
5. Documented additional hours
A common area of exposure arises where employees record hours beyond their contracted arrangements, particularly in businesses that use timesheets, but no active steps are taken to manage or reconcile those hours.
Example: An employee is contracted to work 38 hours per week but regularly records 45–50 hours in their timesheets. The employer does not formally approve the additional hours, but the timesheets are submitted, visible and not challenged. Over time, this pattern becomes consistent.
In these circumstances, the employer may face a claim that:
- the additional hours were known or ought reasonably to have been known by the employer
- the work was performed for the benefit of the business and
- the employee is therefore entitled to be paid for those hours in accordance with the applicable award, contract or statutory framework.
Where reliable timesheet records exist, they can significantly strengthen an employee’s position in a backpay claim. What may have been intended as informal flexibility can instead be interpreted as evidence of a sustained pattern of unpaid work.
From a practical perspective, it is not enough to simply include contractual limits on hours. Employers should ensure that:
- there is active oversight of timesheets
- additional hours are either approved, rejected or addressed in real time and
- working patterns align with both contractual terms and any applicable award provisions.
Without that discipline, recorded hours can become the basis for retrospective claims, often extending over a number of years.
The need for periodic reviews
What these scenarios highlight is that risk rarely arises from a single decision. It is the accumulation of small, reasonable decisions over time, each of which shifts the employment arrangement slightly away from its legal foundation.
For employers, the key is to ensure ongoing alignment between:
- the employment contract
- applicable awards and legislation
- and the day-to-day reality of the role.
Periodic reviews, particularly of classifications, duties and remuneration, can identify issues early, before they become entrenched.
Aubrey Brown Lawyers’ Employment Law Team
The Employment Law team at Aubrey Brown Lawyers works with employers to proactively review their workforce arrangements, identify areas of risk and implement practical, commercially aligned solutions.
If you would like clarity on how your current arrangements align with your legal obligations, or support in navigating a specific issue, our team would be pleased to assist you.
Call our team on (02) 4350 3333 to make an appointment.
