Annualised salaries what should an employer do?

Background

Many employers use an annualised salary arrangement. The alternative is to pay any award employees any additional entitlements (such overtime and penalty rates) as and when they fall due.

In 2019 the Fair Work Commission conducted a review of a number of modern awards. As part of the review the Commission finalised the terms of a new standard ‘annualised wage arrangement clauses’. 22 modern awards have been varied. The individual awards should be checked. These changes are effective from 1 March 2020.

What should an employer do?

There are number of things that an employer should do. These include:

1. Have an accurate system that records the start time and finish time together with any breaks for all award employees.

2. Provide this information regularly (each pay period or roster cycle) to all employees who can confirm that it is accurate.

3. Make sure that all employees who are affected by a modern award are correctly classified under the award.

4. Review against the award any annualised salary arrangement on an annual basis or on the termination of the employment and make sure that the annualised salary is greater than any award entitlements. If not any shortfall should be paid to the employee within 14 days

5. Have an appropriate policy dealing with overtime and working from home.

6. Ensure that any agreement specifies the award entitlements that are satisfied by the annualised salary arrangement, how the annualised wage has been calculated and the outer limits of any obligation to work overtime.

Provided an annualised salary is sufficiently greater than any award entitlements, exposure to any claim is likely to be limited. Obviously, the records required should be kept and the process set out in the award followed.

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