Allowances

Allowances are designed to compensate employees for various aspects of their work that go beyond their basic salary. This might include extra pay for working under challenging conditions, using unique skills, or even for the additional costs they incur while performing their job, like travel expenses. Each allowance is usually tied to specific job functions or conditions, ensuring fair compensation for extra demands or costs associated with a role.

Common types of allowances

Modern awards set out the allowances employees must be paid. They usually fall into three groups: skill or responsibility allowances (for example, a first aid or leading hand allowance), allowances for working conditions (for example, dirty, hot or height work) and expense-related allowances that reimburse costs such as tools, uniforms, meals or using a personal car. Some are paid for all purposes, which affects overtime and penalty calculations. For example, an employee who uses their own car for work deliveries may be owed a per-kilometre vehicle allowance under their award.

Our guide to modern awards explains how to find the allowances that apply, and an HR compliance audit can check you are paying them correctly.