Changes to the annualised salary provisions in 19 modern awards, including the Clerks – Private Sector Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010, took effect on 1 March 2020.

What’s changed?

Depending on which modern award(s) applies to your workforce, it could include one of three different variations on new “annualised salary” clauses introduced by the Fair Work Commission.

As is so often the case, the devil with these changes is in the detail and it’s important to check the specific award(s). However,  common elements to the three types of annualised salary clause are:

  • The terms of the annualised wage arrangement must be set out in writing, and include the following:
  • the wage payable under the arrangement;
  • the specific provisions of the award that will be satisfied by payment of the annualised wage (Note: under the model clauses, annualised wage arrangements are able to satisfy any or all of the following award provisions: Minimum weekly wages; Allowances; Overtime penalty rates; Weekend and other penalty rates; and Annual leave loading);
  • the method by which the annualised wage has been calculated, including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation; and
  • certain information about the hours of work covered by the annualised salary in order to define the outer limits of the arrangement.
  • The annualised wage must be no less than the amount the employee would have received under the award for the work performed over the year for which the wage is paid (or if the employment ceases, over such lesser period as has been worked).
  • Every 12 months from the commencement of the annualised wage arrangement (or within any 12 month period upon the termination of employment) you will need to calculate the amount of remuneration that would have been payable to the employee under the provisions of the award over the relevant period and compare it to the amount of the annualised wage actually paid to the employee.
  • If the amount paid is less than the amount owed, you will need to pay the employee the amount of the shortfall within 14 days.
  • You are required to keep a record of the starting and finishing times of work and any unpaid breaks taken of each employee subject to an annualised wage arrangement for the purpose of undertaking the comparison outlined above. This record must be signed by the employee, or acknowledged as correct in writing (including by electronic means) by the employee, each pay period or roster cycle.

Options for employers

It’s important to understand that these annualised salary arrangements are an option but not the only option, and certainly not a mandatory requirement, for remunerating your award covered workforce (including where you currently have and want to retain the use of annualised salaries).

If you currently rely on an annualised salary in an award, and it is one of the award clauses that is changing, then you will need to urgently review and update these arrangements if you want to continue to rely upon the annualised salary clause in the award.

If you would like more information about those awards affected by the annualised salary arrangements, please contact Ai Group’s Workplace Advice Service on 1300 55 66 77. 

Alternatively, if you would like advice about managing your employment contracts and structuring such arrangements please contact your local employment, workplace and industrial lawyer in Sydney, Newcastle, Wollongong, Adelaide, Melbourne or Brisbane or contact Ai Group Workplace Lawyers here

by Shona d’Arbon

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