The Fair Work Commission has recently announced changes to annualised salary provisions and our colleague, Matt Bell from the Business & Employment Team at Murdoch Lawyers has provided us with a deeper insight for business owners.
As part of its four-yearly review of modern awards, the Fair Work Commission will be introducing new provisions regarding annualised salary arrangements in 22 modern awards. The new provisions will affect full time employees and commence on 1 March 2020.
There are three category clauses being introduced depending on the award. They will require employers to ensure that any employees who are paid annualised salaries are in a better position when compared to entitlements they would have otherwise received under the relevant award.
Both provisions will generally require employers to advise employees in writing and keep records of the following:
- How the annualised salary has been calculated, specifying separate components and factoring in any overtime or penalty assumptions used;
- The outer number of ordinary hours that would attract penalty rates under the modern award; and
- The outer number of overtime hours the employee may be required to work in a pay period or roster cycle without receiving any additional payments.
Employers must make additional payments to their employees if the work hours are in excess of the outer limits specified in their salary arrangements. They must also keep a record of the hours worked by employees, have the record signed by each employee, and every 12 months conduct a reconciliation to check that the employee has been better off under the annualised salary arrangements compared to the award. Where there is a shortfall the amount must be paid to the employee within 14 days.
You need to prepare now to ensure you are compliant with these new provisions! Even if your business is not impacted by these new modern award provisions, it is a timely reminder to review your annualised salary arrangements and ensure that you do not become the next employer being accused of wage theft.