Annualised Salaries Changes

The Fair Work Commission had made some changes to 20 modern awards, inserting annualised wage arrangement clauses.  These changes come into effect on 1 March 2020.

Annualised wages are wages which are intended to be inclusive of payment for minimum payment for wages for ordinary hours and any or all of various entitlements including overtime, allowances, penalty rates and annual leave loading.

These changes will impact how employers notify, record, administer and reconcile annualised wages for employees covered by these 20 awards.   The requirements are different depending upon the award but contain many common or similar provisions.  Changes to subsequent groups of awards will be rolled-out on as yet undetermined dates and will be carried out in 2 further tranches.

Under the changes, employers will be required to advise (or in some cases, agree with) the employee in writing (and keep a record) of the award provisions that are satisfied by payment of the annualised wages, the method by which the wages have been calculated (including each component of the wages and any overtime or penalty assumptions used in the calculation).

Employers are also required to notify affected employees in writing of the outer limit number of ordinary hours beyond which, if worked, employees would be additionally compensated for overtime or penalty rates in each pay period or roster cycle.

Under some awards, the annualised wages arrangement can be terminated on 12 months’ notice or at any time by written agreement.

At the end of each 12 month period of employment, or upon termination, the employer will be required to compare the annualised wage paid against what would have been payable under the award.  Any shortfall is required to be paid within 14 days.

The clause also requires the employer to keep records of starting and finishing times of work and unpaid meal breaks of each employee, for the purpose of undertaking the comparison exercise.  This record is to be signed by the employee, or acknowledged as correct in writing (including by electronic means) by the employee, each pay period or roster cycle.

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