Allowances can generally be separated into two broad categories: 

  1. Those which are intended to reimburse actual expenditure incurred by an employee, such as tools, travelling, meals, etc,  
  2. Those which relate in some way to the nature or location of the work itself, such as exposure to weather, special skills, locality. 

Under modern awards, work-related allowances are usually expressed as a percentage of a specified “standard rate per week”, while reimbursement allowances are usually adjusted annually by the price movement in the Consumer Price Index published by the Australian Bureau of Statistics. The adjustment to both types of allowances will occur from the first pay period commencing on or after 1 July each year. 

The following (alphabetical) allowances are discussed below: 

  • All-purpose allowance 
  • Camping 
  • Car/motor vehicle 
  • Clothing 
  • Confined space 
  • Dirty work 
  • Disability
  • Distant work 
  • District 
  • First-aid 
  • Height 
  • Hot places 
  • Industry 
  • Insulation 
  • Laundry 
  • Leading hand 
  • Living away from home 
  • Meal 
  • Multi-storey 
  • Shift allowance/loading 
  • Site 
  • Special rates 
  • Tools 
  • Travelling 
  • Wet places 

Payment of allowances 

The expression of the allowance in a modern award or an enterprise agreement is important in determining its application. For example, a first-aid allowance that is expressed as $x per week may be pro-rated for the time the employee is required to act as a first-aid attendant. This also means the allowance payable to a part-time employee with first-aid responsibilities is based on the proportion of the ordinary hours worked by the part-time employee compared to the weekly hours. 

Conversely, if it states that an employee appointed as a first-aid attendant is to be paid a weekly allowance of $x, the allowance cannot be pro-rated. 

All-purpose allowance 

Some modern awards and enterprise agreements provide for an allowance to be deemed to be payable “for all purposes of the award”. This means that it is included in all calculations prescribed by the relevant award or agreement, such as overtime and penalty rates, paid leave such as public holidays, annual leave and personal/carer’s leave. Such allowances usually include industry allowance, tool allowance, leading hand allowance and first-aid allowance, but refer to the relevant award or agreement to establish the nature of each one.  

Camping allowance 

Where an employee is required to reside away from home at places where accommodation is not available, camping facilities must usually be provided by the employer and provision is usually made in such cases for the payment of a camping allowance of a specified amount.

Car allowance (motor vehicle) 

This is an additional payment to employees as compensation for the use of their own car in the course of their work. It is usually prescribed as an amount paid per kilometre travelled by the employee during the course of employment. 

It is usually adjusted by the applicable index figure published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index “Private motoring” sub-group. 

A Full Court of the Federal Court found that an employee working a split shift at different regional locations for the same employer was entitled to be paid motor vehicle allowance for use of her own motor vehicle under the applicable enterprise agreement. In the absence of any evidence of timely or available public transport between the towns, that there was an implied direction that the employee uses her car for work purposes. See Tyndall v Goulburn Valley Health [2016] FCAFC 139 (14 October 2016) 

 Clothing allowance 

A modern award may provide that where an employee is required to wear a uniform, he/she will be supplied with an adequate number of uniforms appropriate to the occupation free of cost. Instead of the provision of uniforms, the employer may, by agreement with the employee, pay a uniform allowance. 

This allowance is usually adjusted by the applicable index for figures published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index “Clothing and footwear” group. 

The modern award usually requires that a uniform supplied by the employer or employee be laundered at the employer’s cost. There may be a separate laundry allowance to compensate the employee in this circumstance. 

Confined space 

This is usually provided under “special rates” which may prescribe an additional hourly amount when an employee is required to perform work in the workplace, a space, the dimensions of which necessitate an employee working in a stooped or otherwise cramped position; or a space without proper ventilation.  

Dirty work allowance 

This is usually provided under “special rates” and is an additional payment for working in dirty conditions, provided the conditions are unusually or exceptionally dirty and are not already taken into account in the rate of pay.  

Disability allowance 

This is an additional payment to an employee performing work in different circumstances not taken into account in fixing the wage rate for the applicable classification. Tribunals have usually determined that dirty work allowances are not ordinarily intended to apply in the case of employees who work in occupations in which exceptionally dirty conditions are a natural incidence of the work involved. 

Distant work 

Special provision is made in some modern awards and enterprise agreements to compensate an employee who may be required to work away from their normal place of work. In the case of an employee who goes straight from their home to the “outside” job, it is usually provided that they are paid travelling time at their ordinary rate for all time spent in excess of time usually spent in travelling to their normal place of employment, together with any excess fares incurred. 

Where employees are required to travel long distances in the course of their employment they are usually allowed travelling time up to a specified maximum number of hours in each 24-hourly period, together with all fares and travelling expenses reasonably incurred. 

District allowance

Some modern awards provide a district allowance. One example is a “Broken Hill” (NSW) allowance. This means an employee will receive an allowance of a percentage of the “standard rate” under the award. 

First-aid allowance 

A modern award may provide that where an employee is required by the employer to act as a first-aid attendant an additional allowance is payable. This allowance however is not usually payable to an employee who possesses a first-aid certificate but has not been appointed to perform first-aid by the employer. 

Follow-the-job allowance 

In occupations where employees have normally no fixed place of employment, such as the building and construction industry, or where they are frequently required to change their usual place of work, payment of a follow-the-job allowance is to take into account a factor prescribed as a formula, for example, a factor of eight days would mean a formula of multiplying the appropriate weekly rate by 52 divided by 50.4. 

Height allowance 

Some modern awards provide for the payment of special allowances to an employee required to work in high places. A greater amount may be payable depending on the increased height above ground level at which the work is performed. This is generally a different type of allowance from a “multi-storey allowance” (see below). 

Hot places 

This is paid to an employee for work in a location where the temperature is artificially raised above normal levels, such as near a blast furnace unless the temperature level was taken into account when fixing the rate of pay. 

Industry allowance 

This allowance usually applies to all employees in a particular industry (or section of an industry) because of the existence of special features characteristic of work associated with that industry, common to all employees covered by the award. Such an allowance is generally payable “for all purposes of the award” and is usually taken into consideration in computing any calculation prescribed by the award, such as overtime and periods of paid leave such as personal/carer’s leave (including compassionate leave), annual leave and public holidays. 

Insulation allowance 

This is a payment in addition to the ordinary rate of pay to workers handling, or working in the vicinity of, substances used in the production of insulating material, as silicate of cotton, insul wool, charcoal, pumice, granulated cork, etc. 

Laundry allowance 

Where an employee’s uniform is not laundered at the employer’s expense, the employer is usually required to pay a laundry allowance, per week or per day/shift. This allowance is usually adjusted by the applicable index published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index for the “Clothing and footwear” group. 

Leading hand allowance 

An employee appointed as a leading hand or chargehand under a modern award is generally an employee who, though not appointed as a foreperson/supervisor (or assist in supervising) the work of a number of employees under them. The rate for an allowance varies based on the number of employees supervised, and usually forms part of the ordinary weekly rate of pay and therefore, is taken into account when calculating entitlements. 

See Distant work above. 

Meal allowance

Many modern awards provide that an employee, required to work overtime in excess of a specified period, in some cases without being notified the previous day or earlier, is supplied either with a meal by the employer or paid a meal allowance. Provision is also made in some cases for the payment of an additional meal allowance where the overtime extends into any subsequent mealtime.

This allowance is usually adjusted by the applicable index figure published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index for the “Take away and fast foods” sub-group. 

Multi-storey allowance 

This is a payment in addition to the ordinary rate of pay, prescribed in the relevant building and construction industry awards for working above ground level. The amount of the allowance depends on the floor or level of the building on which the employee is working that day. 

Shift allowance/loading 

Where a modern award or enterprise agreement provides for shift work, there is usually a provision for shift allowance. The amounts will vary depending on the modern award or agreement and are usually expressed as a percentage of the employee’s classification rate. A shift allowance is usually not payable for shifts not worked, such as personal/carer’s leave, public holidays, etc unless otherwise prescribed by the award or agreement. 

Site allowance 

It is common in the building and construction industry that the parties may agree on a specific allowance to apply to a particular building site. If such an allowance is awarded or agreed upon, it will usually apply in lieu of any disability allowances contained in the relevant modern award. 

Special rates 

To provide for cases where work is performed under unusually disagreeable or dangerous conditions, awards may contain special or extra rates to meet such cases. These special rates are most commonly payable where work is performed in places unusually hot, cold, wet, dirty, unpleasant or unsafe, confined spaces, high places or underground. Generally, special rates are not cumulative. If two or more disabilities apply at the same time the employer is usually required to pay only the one rate, namely, the highest for the prevailing disabilities. Also, while special rates are to be paid irrespective of the times at which the work is performed, they are not to be taken into account when calculating overtime or other penalty rates. 

Tools allowance 

It is customary in most trades for each tradesperson (and in some instances apprentices) to possess a kit of tools necessary to carry out most classes of work, except for tools that are so unwieldy or heavy that they are difficult to carry about. The tool allowance is generally prescribed by an award to compensate for wear and tear on tools. It is also common that this type of allowance is “payable for all purposes of the award”. This means the allowance is usually taken into account when calculating entitlements such as overtime and penalty rates, and periods of paid leave such as personal/carer’s leave, annual leave and public holidays. 

This allowance is usually adjusted by the applicable index figure published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index for the “tools” component of the “Household appliances, utensils and tools” sub-group. 

Travelling allowance 

Some modern awards compensate employees for any inconvenience caused by the location of their work, where the employee is required to travel to another workplace from the normal workplace, where public transport is not readily available, or where the isolation of the workplace necessitates an unusually long travelling time. 

Wet places 

A modern award may provide this allowance to an employee in a workplace where clothing or footwear are likely to become saturated, and for working in which employees are either supplied with protective clothing or are paid a special rate.