Changes to Awards – Annualised Salary

Amendments to 23 Modern Awards commenced on 1 March 2020 and if you are an employer these amendments will require you to review your contracts to ensure that you are continuing to comply with your obligations.

The amendments relate to annualised wages and impose strict obligations on employers if an annualised wage is being used.

The 23 Awards impacted are:

We expect that there are a number of our clients with employees employed under the Clerks-Private Sector Award and the Manufacturing and Associated Industries and Occupations Award who will be impacted by these changes. In the future the Hospitality Industry (General) Award 2010 and Restaurant Industry Award will also be impacted.

The new clauses are quite prescriptive so it is a relief that the Fair Work Commission has clearly stated that employers and employees are not obliged to rely on award annualised salary clauses and can continue to utilise common law contracts with “set-off” clauses.

There are two different model clauses that apply depending on which award you are covered by. The obligations that are common to all of the awards are:

• record the award provisions which are satisfied by the annualised salary.
• record the method by which the annualised salary has been calculated, including specification of each separate component of the annualised salary and any overtime or penalty assumptions used.
• record the “outer limits” of ordinary hours which attract penalty rates and overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised salary.
• in any pay period or roster cycle, pay  an employee for any hours in excess of the identified outer limits.
• each 12 months, or on termination of employment, calculate the remuneration payable under the award and compare it to the amount paid as an annualised salary, and make good any shortfall within 14 days.
• keep a record of the start and finish times of work and any unpaid meal breaks.  Employees must sign or acknowledge the record as correct in writing each pay period or roster cycle.

If you are employing staff under an annualised wage then now is the time to review your contracts and arrangements to ensure that you are complying. Even if you are relying on an employment contract with a set-off clause this is not a set and forget arrangement and you must ensure that you are regularly reviewing the arrangement to ensure that the employee is receiving all of their entitlements.

If you would like assistance with your employment contracts or understanding the annualised wage changes then please contact a member of our team today.