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Suggested productivity allowance clause for inclusion to employment agreements

As globalisation of construction accelerates the products and services entering the Australian market, our local industries will face additional competition, to prosper, contractors will need to either increase customer value or exit the industry.

In an effort to combat the paradigm shift employee performance planning models to protect local skills and industries should not be overlooked. Performance plans can be an effective tool for increasing employee engagement and productivity, and can be expressed in future employment agreements.

Classifications & Remuneration

Many agreements have a productivity allowance which is paid regardless of any production measure or validation. For example, some agreements have the following clause:

Extra Benefits and Provisions

Company Productivity Allowance

“The Company will pay a company productivity allowance of $3.50 per hour for each hour worked”.

Company Productivity Allowance – New Clause (Example)

  1. The Company will pay a company productivity allowance of $3.50 per hour for each hour worked.
  2. The company productivity allowance or productivity bonus is subject to review based on employee production performance, and may including project progress, quality, safety, or other criterion determined by the Company. Payment in the amount of the productivity allowance or productivity bonus may be discounted in circumstances where employee productivity performance is measured or assessed as unsatisfactory. Alternatively the amount of excess may be offset against any later increase in the hourly rate prescribed in the agreement.
  3. The Company may enter into an arrangement with an Employee or Employees to pay remuneration in the form of a productivity allowance or productivity bonus in excess of that provided in the agreement.
  4. Where additional remuneration is paid by way of a higher hourly rate, the new rate shall become the hourly rate for all purposes of this Agreement, and for purposes of determining Long Service Leave entitlements.
  5. Any such payment or other entitlements provided to Employees in excess of the minimum requirements set out in the Agreement (if applicable), may be off set against any liability, claim or entitlement that an Employee may claim against the Company with respect to their employment.
  6. This clause does not apply where there is an underpayment of entitlements such as superannuation or other third party contributions. In circumstances such as these, any over-payment of entitlements under the agreement could not at law be offset against the liability to the third party.

Production Management

To achieve optimal results it is recommended that business owners implement a scoreboard with a cadence of accountability, this adds value to the employer and their employees. Scoreboards and graphs provide a live visual feedback loop for which everyone is aware of how teams are performing, therefore, allowing both the employer and employees the opportunity to review and make changes where necessary.

For more information pertaining to productivity scoreboards contact Trade-Up Construction Productivity at


This material has been prepared for the general information of Members of the MCA. It is not intended to take the place of professional advice and readers should not take action on specific issues in reliance upon any matter or information contained in it.

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