It’s a little bit ironic that when we talk about Allowances in the workplace, it’s a lot like an allowance you might have received as a child for helping with tasks at home. An Allowance is effectively compensation for the right to use or benefit from a specific item during the course of employment. The Allowance may be for both tangible and intangible things. It may also be something paid in isolation or something which is paid regularly and reoccurring.

Let’s look into it a little more.

You know those Modern Awards that we keep referring to, well you guessed it – some Awards stipulate certain Allowances for certain industries. They may come in the form of reimbursement for the use of private equipment. They may come in the form of monetary allowance for the use of additional time or inconvenience of being away from the Employees normal residence. This might coincide with a meal allowance whilst travelling. It might be an allowance for additional training that the Employee has undertaken to allow them to do a specific competency-based role.  They may come in the form of Union requirements like site allowance, tool allowance and travel allowance.  It might come in the form of protective clothing or uniform and laundry allowance.

The list is endless and can incorporate many Employees. But again, failure to understand or properly consider these allowances in your remuneration structure may result in an underpayment. Paying allowances is a key component when we conduct BOOTS tests (see: Better Off Overall Tests (BOOTs) ( We need to incorporate these allowances into the overall situation. If you are not paying them and you should be, this will have a negative impact on your overall buffer.

For Employees who do not fit into an Award, does this mean they miss out? As we’ve seen in the last two years with Employees working from home, Employers are and can pay a possible mobile/internet allowance, a Working from Home Allowance or a Health and Wellbeing Allowance. In effect you could pay an Allowance for anything if it benefits the Employee and is something that they can utilise in the course of their employment. These types of discretionary allowances should form part of the Employee’s Employment Contract. That way both parties are clear around what is being received and when.

Nonetheless, it is also worth noting that the ATO also have advice and guidelines on Allowances from a tax perspective. This can sometimes differ from the Fair Work Australia advice or definition, so it’s worth engaging with Professionals to understand how it applies to you. Both parties set out specific amounts that need to be paid for different items, again this is worth considering when determining your compliance and which piece of legislation supersedes the other.

Not sure if you are compliant or need someone to talk you through it?

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