Have You Reviewed Your Annualised Salary Arrangements to Ensure You are Complying with new Award Requirements?

Annualised Salary Arrangements

On 1 March 2020 new annualised salary arrangements commenced operation in 22 modern awards.  The new provisions impact full time employees receiving annualised salaries and require employers to advise these employees in writing of the following:

  • How the annualised salary has been calculated, specifying separate components and factoring in any overtime, penalty rates or other assumptions used;
  • The outer number of ordinary hours that would attract penalty rates under the modern award; and
  • The outer number of overtime hours the employee may be required to work in a pay period or roster cycle without receiving any additional payments.

Employers must also keep a record of the hours worked by these employees, their start and finish times including meal breaks and have the record signed by each employee. Every 12 months or when the employee leaves, employers must conduct a reconciliation to check that the employee has been better off under the annualised salary arrangements compared to the award. Where there is a shortfall the amount must be paid to the employee within 14 days.

If you have not done so already, you should:

  1. Assess how each annualised salary arrangement was formulated, identify the assumptions used and the calculations made to determine the annual pay rate and ensure these remain accurate and reflect the current award rates and entitlements;
  2. Enter into new written arrangements with all employees that receive annualised salaries which meet the specific requirements of the relevant award;
  3. Have comprehensive set off provisions in your employment agreements;
  4. Implement a timesheet system which meets the award requirements and includes the employee signing off or otherwise agreeing in writing that the hours recorded are correct; and
  5. Conduct audits annually and when an employee leaves to reconcile the annual salary against the award entitlement.

Not all modern awards are impacted by these new provisions. If you are unsure if your business is affected, please contact our Business and Employment team Suzanne Wishart and Matt Bell on 1300 068 736.

Even if your business is not impacted by these new modern award provisions, it is a timely reminder to review your annualised salary arrangements and ensure that you do not become the next employer being accused of wage theft!

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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