Why structure matters
Pay needs to be a hygiene factor at your service. Something you get right, consistently, so it is not an issue. The biggest risk with pay reviews is that decisions end up being made on gut feeling rather than against a clear structure. Over time, those inconsistencies compound into frustration, disengagement and turnover.
A structured pay review process does three things. It protects your service from underpayment and Fair Work risk. It gives you a defensible reason for every decision you make. And it gives educators confidence that pay is being handled fairly, not based on who asks the loudest.
The four layers of a pay decision
Every pay decision at your service sits on four layers. You work from the bottom up. You do not move to the next layer until the one below is cleared.
The award floor
The Children's Services Award or Teachers Award minimum for the classification. Non-negotiable. This is the absolute floor.
Your service's ability to pay
Have occupancy and financial targets been met? If not, it may not be financially responsible to lift pay right now. Be transparent about that qualifier.
Team or service performance
Optional layer. If you run a multi-room service, did the team collectively hit the goals? Only add this if it does not over-complicate the process.
Individual performance
The percentage of individual goals achieved over the year. This is where clear goal-setting pays off the most.
If your service does not have a clear goal-setting process yet, pay reviews are going to be uncomfortable. The work is not the pay review, it is what you did (or did not do) with goals over the previous year. Fix that cycle first, and the pay review becomes a conversation about data, not opinion.
The award floor
Every educator covered by the Children's Services Award 2010 or the Educational Services (Teachers) Award 2020 must be paid at least at the minimum rate for their classification. Not most of the time. Every time. Including when you have given them an annualised salary that was supposed to cover overtime and penalties.
Award classifications change based on the role and qualifications, not on performance. Performance is a separate conversation that sits on top of the award floor, not inside it. A strong performer who is paid at the award minimum is still being paid correctly under the law. The question is whether the service wants to pay above the award, and what the rationale is.
The 1 July award update
Each year, the Fair Work Commission runs the Annual Wage Review. Minimum award rates are reviewed and usually increased. The percentage is announced around mid-June. The updated pay tables are released closer to the end of June. The new rates apply from the first full pay period starting on or after 1 July.
In practice, that means:
- If your pay period starts on 1 July, the new rates apply from that pay period.
- If your pay period starts on, say, 4 July, the new rates take effect from 4 July. You do not split a pay period between the old and new rates.
- If you are paying someone at or close to the award rate, they need a pay change letter confirming the new rate.
- If you are paying someone an annualised salary, you need to re-check that the salary still exceeds the new minimum.
Pay bands and consistency
Once you have cleared the award floor, you need to make an intentional decision about where you pay in the market. Are you paying at the award only? Above the award at the lower end of the market? Middle? Higher end? There is no right answer, but there is a required answer. You need to decide, document it, and be consistent.
How to find the market
- Seek Salary data. Live, specific to role and location, updated constantly. A strong first source.
- Salary surveys. Recruitment firms release free salary surveys most years. Industry research bodies release deeper reports, sometimes paid.
- Two or three sources. Triangulate. One source can be distorted by one job posting. Three sources give you a real range.
Once you know the market range, decide where your service sits and be honest with the team about it. A standalone NFP in a regional location may not be able to pay at the top of the market. That is okay. What is not okay is pretending to compete on pay while paying at the bottom of the market with no rationale.
Pay bands by role
For each role in your service, set a pay band. A lower rate for someone new to the role. A higher rate for someone experienced with all the capabilities the role needs. Between those two points, define the criteria that move someone up the band: qualifications, years of experience, specific capabilities, contribution to the service.
The review cadence
The cleanest pay review cadence ties pay directly to the percentage of individual goals achieved over the year. Something like:
- 100% of goals achieved. Higher pay increase.
- 85 to 100%. Moderate pay increase.
- 50 to 85%. Smaller increase, or aligned to CPI.
- Less than 50%. The question becomes whether the issue is performance, or whether the goals were unrealistic. Either way, it is a conversation before it is a pay outcome.
A useful qualifier to include: educators currently in performance management are not eligible for a pay increase until the issues are resolved. This works only if you are addressing performance issues consistently through the year. If performance concerns get raised only at pay review time, the qualifier becomes a surprise and a source of conflict.
The pay review conversation
The pay review conversation should be clear, consistent and linked to both service results and individual performance. The goal is to explain how the decision was made and what it means. Not to debate the outcome.
Open the conversation
Explain the pay review factors
Review individual performance
Communicate the outcome
Look ahead
Close the conversation
If someone raises a pay concern
If an educator comes to you and says they believe they are being paid less than a colleague for doing the same work, do not dismiss the concern and do not delay the conversation. Acknowledge it, say you will look into it, and do exactly that.
Review the pay rates, classification levels, qualifications and years of experience for the roles being compared. If there is a legitimate gap you cannot explain through those factors, address it. If there is a clear rationale for the difference, explain it honestly.
If you discover an underpayment
If you identify that an educator has been underpaid under the award, act quickly. Do not wait for the next pay cycle. Calculate the amount owed, make the correction, and tell the educator directly. Be transparent about what happened and what you have done to fix it.
- Calculate the amount owed, including back pay, superannuation on the back pay and any leave accruals that should have applied.
- Correct the underlying rate in payroll so the same gap does not reopen.
- Notify the educator in writing. Do not try to correct it on the side without telling them. Educators have a right to know.
- Document everything: the error, how it was identified, the amount, the corrective action.
- Depending on the size and circumstances, consider whether you need to self-report to the Fair Work Ombudsman. If in doubt, get advice from an HR professional or employment lawyer before deciding.
Pay secrecy is gone
Pay secrecy clauses in employment contracts are no longer allowed under the Fair Work Act. Educators are legally allowed to share their pay with each other if they choose to. They are not required to. But they have the right.
This changes how you need to approach pay decisions. Every decision needs to be one you could explain openly to the whole team if the information became known. That raises the bar, but it also clarifies the work: fair, consistent, documented decisions that can stand up to that conversation.
If the thought of the team comparing notes makes you nervous about a specific pay decision, that nervousness is a useful signal. It usually points to a gap that needs to be closed now, before the conversation happens for you.
What to do, what to avoid
Do
- Check the award floor first, before every decision.
- Put 1 July in your calendar every year.
- Set pay bands for each role and document where every educator sits and why.
- Tie pay outcomes to the percentage of goals achieved.
- Address performance concerns when they happen, not at review time.
- Follow every conversation with a written pay change letter.
- Act quickly and openly if an underpayment is discovered.
Avoid
- Pay decisions based on gut feeling with no documented rationale.
- Bringing new hires in at the top of the band while existing educators sit at the bottom.
- Adding vague "culture fit" or "values" ratings to the pay review.
- Surprising educators with performance concerns first raised at pay review.
- Over-justifying or debating a pay outcome in the review meeting.
- Correcting an underpayment without telling the educator.
- Assuming pay is confidential. Under Fair Work, it is not.
Next steps
Use these three tools together to run a clean pay review cycle end to end.