The terms and conditions of employment for security services are regulated by the FW Act, and the Fair Work Regulations 2009 [the FW Regulations].
The relevant modern award for the purpose of this Inquiry was the Security Services Industry Award 2010 [the Security Award]1.
The Inquiry found that employees performed duties listed for a Security Officer Level 1 or a Security Officer Level 2. At the time of the compliance phase of the Inquiry, the ordinary hourly pay rate for a full time/part time Security Officer Level 1 was $19.42 and for a full time/part time Security Officer Level 2 was $19.982.
The ‘total cost of an employee’ comprises both direct and indirect costs.
Direct costs may include:
- minimum ordinary hourly wage rates
- overtime and public holiday rates
- shift and weekend penalties
- casual loadings
- allowances (including first aid)
- leave payments, e.g. personal leave or annual leave
- annual leave loadings.
Indirect costs may include two categories:
- cost of items that provide a benefit to the individual employee, and
- cost of items that are a part of running a business and a consequence of employing staff.
'Benefits' cover a very wide range of items in the security sector, for instance, cars, parking, insurance, health insurance payments or contributions, mobile phones, laptops/other computers, education expenses, cost of licenses and training and accommodation.
The value of superannuation contributions should also be counted as an indirect cost because they are paid directly to a fund rather than as cash to the employee. Superannuation contributions are compulsory, and if they are not paid the employer must pay the Superannuation Guarantee [SG] Levy. The SG charge should be added to indirect costs.
Other common indirect costs include workers compensation premiums and payroll tax. Workers compensation premiums vary quite widely according to the industry and type of employment, as well as the employer’s past history. Payroll tax is a state tax and typically does not apply to small businesses, but the rates vary from state to state.
The total cost of employing an employee includes:
- base salary and wages
- other direct cash payments such as penalty rates, leave loading, allowances etc.
- cash value of employee benefits provided to the employee, including superannuation contributions
- Fringe Benefits Tax payable on these benefits
- value of any incentive and bonus payments
- workers compensation premium (per employee)
- payroll tax (per employee)
- SG charge, where payable
- other miscellaneous costs such as cost of training courses.
It is not normal practice in the security sector to include the cost of items such as the provision of uniforms for employees to wear or office equipment because these items are regarded as tax deductible business expenses.
Industry sources estimate on-costs to be around 35-40% of direct costs, however, it is agreed there are possible variables:
- the percentage will be higher than average if there are many supervisory employees as they are usually paid at a higher rate;
- the percentage will be higher than average if the business has high workers compensation premiums due to their workers compensation claims experience, or because it operates in a high-risk sector of the security industry; and
- costs such as workers compensation and payroll tax vary from state to state.
- See Security Award.
- See Pay and Conditions Tool.