The Fair Work Commission recently amended the annualised salary provisions in 22 modern awards from 1 March 2020 onwards. If an applicable award covers your employee(s), your obligations for paying employee salaries are going to change.

Under the Fair Work Act, Employers have always been obligated to pay salaried employees under all Awards at least the same gross amount that they would have received under their respective awards (including overtime, allowances and travel). Most entitlements should already be accounted for, but as salaried employees do not typically record their time and attendance, it has been almost impossible for employers to calculate any entitlements.

Employers that utilise an annualised wage arrangement will be required to:

notify employees of how their annualised wage has been calculated
keep additional records; and
conduct a reconciliation between the award and annualised wage arrangement every 12 months.

With the recent changes to the annualised salary provisions, you need to start tracking full-time employee hours, even if they’re salaried. It means employers can be penalised under the award act, even if their employees are salaried.

For more information on which awards have been amended, click here.

What does this mean for me?

As a general rule, we recommend businesses do the following:

Ensure all full-time employees who fall under one of the relevant awards track and submit all hours worked each week, either in writing or electronically.
Have written documentation in place which records which provisions of the award are intended to be included within the annual salary.
Where an employee works hours which exceed those ‘outer limits’ in a pay period/roster cycle, pay the employee for those hours worked (at the relevant overtime or penalty rate) within the relevant pay cycle.
Reconcile at least once per year employees’ salaries compared with their full entitlements under the Award for all the hours they have worked in the relevant period.
Run reports each time an employee is terminated to ensure they have been paid the minimum amount under the Award for the hours they have worked since 1 March 2020, or since the last annual report.
Immediately top up an employee’s salary for any underpayments identified in comparison with their Modern Award entitlements.

Disclaimer
The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update, Arcaid does not accept liability for any errors it may contain.