All purpose allowance

An all purpose allowance is a financial addition to an employee's regular hourly rate. Unlike other allowances that might be tied to specific conditions like working overtime or in hazardous conditions, an all purpose allowance is more flexible and is included in numerous work-related scenarios. It's a way of compensating employees for various job-related responsibilities that don't fall under specific allowance categories.

How an all purpose allowance affects pay

The key feature of an all purpose allowance is that it is treated as part of the employee's ordinary rate of pay. That means it is included when you calculate overtime, penalty rates and other award entitlements, such as leave payments, as the award sets out. For example, if an award pays a leading hand allowance for all purposes, overtime at time and a half is calculated on the base rate plus that allowance, not on the base rate alone. Your award will say which allowances are paid for all purposes.

Check the allowances in your award with our guide to modern awards, or ask us for an HR compliance audit of your payroll.