Fair Work Changes – Annualised Salary

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Fair Work Changes – Annualised Salary

As of 1st March 2020, Fair Work has announced several changes to 22 Modern Awards, affecting employees with annual salaries.

The changes are designed to ensure an “annual salary employee” is always paid at or above award rates.

What are the Changes

  • Depending on which of the 22 affected Modern awards apply to your workforce (full List of awards below), the model clauses will impose a number of detailed mandatory requirements on employers who pay employees an annual wage in satisfaction of specific modern award entitlements

Which awards are affected?

  • Banking, Finance and Insurance Award 2010
  • Broadcasting and Recorded Entertainment Award 2010
  • Clerks- Private Sector Award 2010
  • Contract Call Centres Award 2010
  • Health Professionals Award 2010*
  • Hydrocarbons Industry (Upstream) Award 2010
  • Horticulture Award 2010
  • Hospitality Industry (General) Award 2010
  • Legal Services Award 2010
  • Local Government Industry Award 2010
  • Marine Towage Award 2010
  • Manufacturing and Associated Industries and Occupations 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
  • Telecommunication Services Award 2010
  • Water Industry Award 2010
  • Wool Storage, Sampling and Testing Award 2010

*commencement date delayed due to further consultation with Fair Work

Why have the changes been introduced?

  • Many employers choose to pay an overall annual remuneration to award covered employees which is intended to absorb award entitlements such as overtime rates, penalty rates & loadings.  However, few employers perform ongoing audits to ensure that the overall Remuneration does in fact compensate employees for each individual award entitlement
  • Fair Work hope that by introducing these measures it ensures that all employees are properly compensated and are better off with an annualised salary

How can you ensure you comply?

The first step is to determine which awards (if any) apply to your workplace ad perform an audit of employee to check they are currently paid correctly for the work they perform.

As an employer, you need to review employment contracts and update HR and Payroll practices. This means auditing annual salaries, record hour of work and back pay any shortfall that might arise audited against modern award entitlements.

You are required by the new clauses to implement payroll and HR practices to ensure employees are at all time paid above award rates including;

  • an annual comparison of the actual wage against calculations of what the employee would have been paid under award rates, and perform back-pay of any shortfall within 14 days
  • Record start and Finish time of work and Unpaid breaks, which must be acknowledge as correct by the employee. Records can be electronic or paper.

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