Award Changes for Annualised Salary Employees – Further Information
03 March 2020
By Nick Tindley
Following on from our article published on 26 February 2020 regarding the award changes to annualised salaries (you can read it here), please find additional information about what you need to know and what content has changed in enableHR.
Annualised Salary requirements in accordance with Award provisions
To recap, below is a list all of Awards affected by the annualised salary decision handed down in 2019.
Model Clause 1 applies to the following Awards:
- 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
Model Clause 2 applies to the following Awards:
- Broadcasting and Recorded Entertainment Award 2010
- Local Government Industry Award 2010
- Manufacturing and Associated Industries and Occupations Award 2010
- Pharmacy Industry Award 2010
- Rail Industry Award 2010
- Horticulture Award
- Pastoral Award 2010
Where an employer enters into an annualised salary arrangement under any of the above Award provisions, the employer must advise or agree with the employee in writing and keep a record of:
- the value of the annualised wage they will be paid;
- which provisions of the applicable award will be satisfied by the annualised wage;
- the method by which the annualised wage has been calculated (including specification of each separate component, and any overtime or penalty assumptions used in the calculation);
- the outer limit number of ordinary hours attracting penalties and the outer limit number of overtime hours which an employee may be required to work in a pay period/roster cycle without being entitled to additional remuneration; and
- that where the employee works in excess of the outer limit of hours, they will be remunerated in addition to the annualised wage in accordance with the Award.
For precise obligations in respect of paying an annualised salary in accordance with an Award provision, please refer to the article published on 26 February 2020 (here).
Paying an annualised salary in accordance with a common law contract
Paying annualised salaries is often a tool used to avoid meticulous compliance with Award provisions relating to hours of work, overtime and penalty rates. This is commonly done through the use of a common law contract where an employees’ annualised salary is used to off-set award entitlements.
The changes affecting the above-named Awards do not change the fact that employers can opt to pay an annualised salary through a common law contract instead.
However, this does not mean that employers should not keep such records.
Our conservative view is that record keeping (and notification) obligations under the Award model clauses continue to apply to employers who pay annualised salaries in accordance with a common law contract of employment. To that end, our recommendation is for employers to keep records of the following:
- the value of the annualised wage they will be paid;
- which provisions of the applicable award will be satisfied by the annualised wage;
- the method by which the annualised wage has been calculated (including specification of each separate component, and any overtime or penalty assumptions used in the calculation);
- the outer limit number of ordinary hours attracting penalties and the outer limit number of overtime hours which an employee may be required to work in a pay period/roster cycle without being entitled to additional remuneration;
- the starting and finishing times of work and any unpaid breaks taken.
enableHR Content Changes
As previously stated, contracts of employment remain unchanged. However, what employers will need to utilise if entering into an annualised salary under an Award provision, is a written agreement between the employer and the employee. This template will be made available by COB Friday 6 March 2020.
How to use the Written Agreement
For new employees, the agreement should be issued at the same time the employment contract is issued.
For existing employees, you will not need to issue a new contract, however you should issue the written agreement.
The written agreement will be made available through enableHR’s Pre-Employment Checklist and against the employee record under the ‘Documents’ tab. Simply follow the prompts and answer the questions and voila`, your agreement is formed. If you issue the agreement via the checklist, your employees will be required to sign electronically the agreement via enableHR’s Self Service module.
If you require further information, please contact the Client Success team on 1300 453 514 or at support@enablehr.com.
Nick Tindley is the Head of Workplace Relations and Advisory at HR Assured and Law Partner at our parent company, FCB Group. Nick has over fifteen years’ experience in providing industrial relations and employment law advice, with particular expertise in the retail industry.