From the 1st of March 2020 changes have been made to annualised salaries covered by some modern awards. Employers must comply with these changes, including a new notification, annual reconciliation and record-keeping.
Employers in the past have reached an agreement with their employees to be paid an ‘all-inclusive’ salary, which includes their base salary, overtime, penalties and loading. From the 1st March 2020 this changes and employers will need to ensure transparency around these calculations.
Employers will need to:
- Decide what, if any, employees are affected by these changes. Organisations can have employees under more than one award.
- Once the employees have been identified, review the need to advise the employee of the upcoming changes and amend employment documents as necessary.
- Review and implement adequate record keeping systems to satisfy the changes to record keeping requirements.
- Review and implement adequate payroll management systems to satisfy the requirement for annual reconciliations.
What are the changes being made?
- Notification to Employees
- Payment for hours worked in excess of the outer limits
- Annual Reconciliations
- Record Keeping
Notification of Employees
Employers must advise the employee in writing of;
- The annualised salary payable to them;
- The Award provisions which are satisfied by payment of the annualised salary;
- The method of calculating the annualised salary;
- The ‘outer limit’ of ordinary hours, in a pay period or roster cycle under the award, that would otherwise attract payment of penalty rates;
- The outer limit of overtime hours the employee may be required to work in a pay period or roster cycle without an entitlement to a payment in addition to the annualised salary.
- Payment for hours worked in Excess of the identified outer limits
Employer must pay employees, according to award requirements in respect to overtime and penalty rates, for hours worked in a pay period which exceeds to outer limit.
Every 12 months from commencement of the annualised salary arrangement (or upon the employees’ termination), the employer will have to calculate the remuneration that would have been owed to the employee under the award, based on their actual hours of work, and compare the annualised salary that has actually been paid. Where there is any shortfall, the employer must pay the outstanding amount within 14 days.
Employers must keep a record of start and finish times of all employees under an annualised salary arrangement, as well as any unpaid breaks. The employees must sign off or acknowledge in writing that the record is correct during each pay period or roster cycle.
The Awards Being Affected
Awards with new requirements from 1st March where an employer pays an annual salary under the annualised salary provisions in awards WITHOUT AGREEMENT FROM NEW OR EXISTING EMPLOYEES
- Banking, Finance and Insurance Award 2010
- Clerks – Private Sector Award 2010
- Contract Call Centres Award 2010
- Hydrocarbons Industry (Upstream) Award 2010
- Legal Services Award 2010
- Mining Industry Award 2010
- Oil Refining and Manufacturing Award 2010 (clerical employees only)
- Salt Industry Award 2010
- Telecommunications Services Award 2010
- Water Industry Award 2010
- Wool Storage, Sampling and Testing Award 2010
Awards with new requirements from 1st March where an employer pays an annual salary under the annualised salary provisions in awards BUT ONLY WHERE AN EMPLOYEE AGREES
- Broadcasting and Recorded Entertainment Award 2010
- Local Government Industry Award 2010
- Manufacturing and Associated Industries and Occupations Award 2010
- Oil Refining and Manufacturing Award 2010 (non-clerical employees)
- Pharmacy Industry Award 2010
- Rail Industry Award 2010
- Horticulture Award
- Pastoral Award 2010
Awards with new requirements introduced at a later date (yet to be determined) - employer pays an annual salary under the annualised salary provisions in awards BUT ONLY WHERE EMPLOYEE AGREES.
- Health Professionals Award 2010
Awards where the new requirements will be introduced at a later date (i.e. a date after 1 March 2020, which is yet to be determined). Where an annual salary is paid to a non-managerial employee this must be BY AGREEMENT. More information about these changes will be available at a time closer to implementation.
- Marine Towage Award 2010
- Restaurant Industry Award 2010
- Hospitality Industry (General) Award 2010
For further information or assistance in preparing for these changes, please contact Successful Alliances.