From 1 March 2020, employers who currently pay annualised salaries to employees covered by certain Modern Awards must comply with new changes, record-keeping and reconciliation requirements…

Are your employees covered by a modern award? If so, your business may soon be affected by changes to Modern Awards…

The number of recent public cases of employers self-reporting or being caught underpaying their staff (often by way of annualised salaries) has called into question the reliability of annualised salary arrangements under Modern Awards. Specifically, whether they are effectively providing a fair and relevant minimum safety net of terms and conditions for employees.

As a result, the greatest change arising from the Modern Award review by the FWC was the implementation of the new annualised wage provisions in many Awards.

Which Awards are affected?

Awards impacted by revised Annualised Salary Arrangements:

  • Banking, Finance and Insurance Award 2010
  • Broadcasting, Recorded Entertainment and Cinemas Award 2010
  • Clerks—Private Sector Award 2010
  • Contract Call Centres Award 2010
  • Horticulture Award 2010
  • Hospitality Industry (General) Award 2010
  • Hydrocarbons Industry (Upstream) Award 2010
  • Legal Services Award 2010
  • Local Government Industry Award 2010
  • Manufacturing and Associated Industries and Occupations Award 2010
  • Marine Towage Award 2010
  • Mining Industry Award 2010
  • Oil Refining and Manufacturing Award 2010
  • Pastoral Award 2010
  • Pharmacy Industry Award 2010
  • Rail Industry Award 2010
  • Restaurant Industry Award 2010
  • Salt Industry Award 2010
  • Telecommunications Services Award 2010
  • Water Industry Award 2010
  • Wool Storage, Sampling and Testing Award 2010

What are the key requirements of the new model clauses?

While there are nuances between the model clauses, all clauses have common requirements. The changes that employers should be aware of are as follows:

  1. Notifying employees in writing of the annualised salary payable to them, the clauses of the modern award that will be satisfied by the annualised salary and how the annualised salary has been calculated.
  2. Specifying the “outer limit” of ordinary hours that would attract penalties or overtime the employee may be required to work in a pay period or roster cycle without being entitled to additional pay.
  3. Undertaking an annual reconciliation each 12 months from commencement of the annualised wage arrangement, to ensure the annualised wage paid to an employee is at least equal to the amount that would have been paid under the Modern Award
  4. Payments to employees for any additional hours worked outside of the ‘outer limit’ within the pay period or roster cycle: this payment must be separate to the annualised wage within that period
  5. Keeping detailed records of the employee’s actual start and finish times (including any unpaid breaks) and requiring employees to sign off, or acknowledge, that the record of hours is correct for that pay period or roster cycle.
  6. Any hours worked in excess of the “outer limit” by an employee paid by way of an annualised salary must be paid separately to the annualised salary as overtime or with the relevant penalty rates.
  7. Under certain awards (including the Hospitality Industry (General) Award and Local Government Industry Award), both the employer and the employee may terminate the annualised salary arrangement by giving 12 months’ written notice.

What should employers do next?

The points mentioned in this blog are a general guideline of the model clauses. It is important you, as an employer, become familiar with the specific provisions within the Award(s) applying to your employees as soon as possible. You may need to spend some time preparing for these changes, such as implementing new processes or systems.

If you have any questions about the upcoming changes, please don’t hesitate to call us on 07 3226 1800 or message us on our Contact Page