Do you pay your employees an annualised salary?

20 March 2020

As of 1 March 2020, the Fair Work Commission introduced changes that may require employers to make amendments to their employees contracts and to their current payroll practices.

Overall, 23 Modern Awards will be impacted by these annualised salary changes, including the Clerks Private Sector Award 2010 and Manufacturing and Associated Industries and Occupations Award 2010. The reason for these changes is to ensure that employees are in receipt of at least the equivalent amount to the Award throughout the year.

What are the changes?

Depending on the Modern Award that applies to your workforce, employees, are required to be informed in writing of for example:

• Which provisions of the Award that will be included in the annual salary payment
• The way in which the annualised salary was calculated
• The outer limit on the number of hours that have been included in the salary
• Number of excess hours that are not covered by the annual salary.

Employers are also required to keep records to demonstrate that, at all times, employees are adequately compensated by the annual wage, including:

• Annual calculations of what the employee wold have received under the Award in comparison to the annual salary actually paid. Reconciliations should be performed annually
• Timesheets or time records of employees start, and finish times and any unpaid breaks taken
• Records must be acknowledged or signed by employees as correct each pay or roster cycle.

What should employers do?

If you have not already it would be advisable to:

• Check to see if your business has employees under the affected Modern Awards
• Become familiar with the changes
• Review any salary arrangements with respect to the new practise and requirements
• Make necessary amendments to wage agreements if necessary
• Implement a system of record keeping in order to meet the necessary requirements.

Should you require assistance in calculating or reviewing your employee’s annualised salary get in contact with the Master Builders Workplace Relations Team.