HR and payroll for automotive in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and HR in Australian automotive businesses follows the same legal framework as any other sector, but the industry's award structure, irregular hours, and commission-heavy pay arrangements create specific obligations that catch employers out.
The Award That Governs Most Automotive Workers
The Vehicle Manufacturing, Repair, Services and Retail Award 2020 (the Vehicle Award) covers the majority of employees in workshops, dealerships, parts businesses and car wash operations. A smaller number of workers fall under the Manufacturing and Associated Industries Award or the Clerks Private Sector Award depending on their role.
Getting the correct award classification right at the start of employment matters. A workshop technician, a service adviser and a parts interpreter all sit in different classification levels under the Vehicle Award, with different minimum pay rates attached. Misclassifying an employee below their correct level creates an underpayment liability that compounds over time.
Check Fair Work Australia's Pay and Conditions Tool whenever you hire into a role you have not classified before. Award rates are reviewed annually by the Fair Work Commission, typically taking effect in July, so reviewing your payslips at the start of each financial year is essential.
Commission, Flat Rates and Piece Work: Getting Pay Structures Right
Automotive businesses — particularly dealerships — commonly pay salespeople on commission or technicians on a "flat rate" (flagged hours) system. These structures are legal, but they must still deliver at least the Award minimum for every hour an employee actually works.
The risk: if a technician books fewer billable jobs in a slow week, their flat-rate earnings may fall below the minimum hourly rate for hours clocked on-site. The employer must top up to the minimum; they cannot simply average it across better weeks.
For salespeople on commission, the same floor applies. A base salary plus commission structure is usually cleaner from a compliance standpoint than pure commission, because the base guarantees the minimum is met regardless of sales performance.
Document the pay arrangement clearly in the employment contract and ensure the payroll system can calculate and flag any shortfall each pay period before the payslip is issued.
PAYG, Super and STP in an Automotive Payroll
The mechanics of payroll compliance are the same as any Australian employer:
- PAYG withholding is deducted from each pay run using the ATO's tax tables. Income tax is progressive, withheld at the employee's marginal rate based on their TFN declaration. Where employees have HECS/HELP debt, an additional repayment amount is withheld on a banded scale on top of ordinary tax.
- Medicare levy of 2% is factored into the standard withholding tables for most employees.
- Superannuation Guarantee sits at 12% of ordinary time earnings from 2026. This applies to ordinary hours worked and does not include overtime. For commission-based workers, ordinary time earnings generally includes the base salary component but the treatment of commissions can be complex — the ATO's guidance on ordinary time earnings is worth reviewing if commission makes up a significant portion of pay.
- Single Touch Payroll (STP) requires you to report every pay event to the ATO on or before the payment date. Finalisation of income statements must be completed by 14 July each year so employees can lodge their tax returns.
Most modern payroll platforms handle these mechanics automatically, but the underlying data — classifications, hours, earnings types — must be set up correctly.
Leave, Overtime and the NES in Practice
Under the National Employment Standards, full-time employees accrue four weeks of annual leave per year. The Vehicle Award adds a leave loading of 17.5% on top of the base rate when leave is taken — a common source of underpayment when payroll systems are not configured to apply it.
Overtime rules under the Vehicle Award are detailed. Penalty rates apply on weekends and public holidays, and the thresholds at which overtime kicks in vary by employment type. Service departments that roster Saturday work as standard need to review whether those shifts are paid at the correct penalty rate, not at the ordinary rate.
For employees dismissed or made redundant, the NES redundancy scale applies, scaling up with years of service. Automotive businesses going through a restructure — whether consolidating service bays or closing a dealership — need to factor this into the cost of any workforce change before announcing it.
Record-Keeping and Wage Theft Laws
From 1 January 2025, intentional wage theft became a criminal offence under the Fair Work Act, with serious penalties for employers and individuals. In a sector where underpayment has historically been driven by complex award provisions and informal pay arrangements, this raises the stakes for getting it right.
At minimum, keep accurate records of:
- Hours worked each day, including start and finish times
- Classifications and any reclassifications
- All amounts paid, including allowances, overtime and loadings
- Leave accruals and balances
Payslips must be issued within one working day of each payment and include the Award or enterprise agreement the employee is covered by. In the automotive sector, where cash payments and informal arrangements have sometimes been common, moving to a documented, system-driven payroll is no longer optional — it is a legal necessity.
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