Myth busting: Solving common misconceptions

Workplace relations is complex and, unfortunately, misinformation is all too common. The REEF team debunks some of the more common myths and gives you the truth.

Myth 1 – Overtime, allowances and other loadings don’t apply if i pay my employees above the minimum rate of pay specified by the relevant award.

Paying an employee above the minimum award rate of pay doesn’t automatically offset award-mandated penalties, allowances or loadings. Instead, it must be made clear that it was intended for an over-award payment to offset these entitlements.

One way to ensure this is for the employment agreement to expressly stipulate that over-award payments are in satisfaction of all wages, penalties, allowances and loadings that are payable under the relevant award.

Of course, the over-award payment should be checked to ensure that it provides an amount higher than the employee would have received had they been paid strictly in accordance with the award.

Myth 2 – Once an employee is outside their minimum period of employment, I must give them three warnings before I can terminate them.

The rules and procedures relating to the termination of an employee outside their minimum employment period are, to a certain extent, prescribed in the Fair Work Act 2009. The size of the business can also have an impact.

There’s no general requirement for an employer to provide an employee with three warnings, verbal or written, prior to dismissing them for poor performance or conduct. Indeed, there’s nothing in the Fair Work Act that deals with how many warnings an employee must be given. Sometimes more than three warnings might be appropriate, sometimes less. In cases of serious and wilful misconduct, it may even be permissible to dismiss an employee without any warning at all.

The key thing to remember is that a dismissal should be carried out in a procedurally fair manner; i.e. there must be a valid reason for the dismissal, the employee must be notified of that reason and they must be given an opportunity to respond.

If the dismissal related to poor performance, the employee should have been warned previously about the poor performance and be on notice that a failure to improve may lead to termination of employment.

Myth 3 – Post-employment restraints aren’t worth the paper they’re written on.

It’s a common misconception that there’s no point including a post-employment restraint in an employee’s contract of employment because the courts will refuse to enforce it.

There are enough examples of courts preventing former employees from acting in breach of their post-employment contractual obligations to show that it’s worth including a restraint in the employment contracts of certain employees.

Having said that, to enforce a restraint the court must be satisfied that there’s a legitimate business interest to protect. The restraint should be carefully drafted to give it efficacy, as poorly worded restraints will likely result in an unfavourable outcome before the court.


If you’re looking for guidance regarding any of these myths, give REEF a call on 1300 616 170. One of our Workplace Relations Advisors will answer all your questions.