Model Annualised Salary Clauses will come into effect in March 2020 following last years changes to 19 modern awards that currently contain an Annualised Salary Clause, including the Clerks – Private Sector Award 2010, ACAPMA advises Members to review their salary provisions now to ensure they are compliant.
It has always been possible, under the law, to pay employees covered by the modern awards an annual salary, that is then divided into 12, 26 or 52 increments according to the businesses pay cycle. The intention in the use of annualised salaries is to provide a remuneration package that covers all of the entitlements (Base Rate, Loadings, Allowances, Penalties etc) that are usually conferred to the employee by the award, and provide it in a clear, concise and consistent manner, using the total “salary” to offset the myriad entitlements (and often requirement to display these separately on a payslip) that is provided for in the award. While some businesses have historically been better at communicating, reviewing and managing the calculation, operation and review of annual salaries, all businesses are now on notice that a detailed, formal and legislated process has been written into the awards with the changes that will come into effect on 1 March 2020.
The model clauses that will effect the 19 modern awards come in four varieties, with model clause one applying to most of the modern awards including the Clerks – Private Sector Award 2010, which has an annualised salary clause at Clause 17. With the adoption of the model clause one the requirements for the operation of Annualised Salaries will include;
- The business will be required to notify the full time employee that the annualised salary applies to, in writing of the following;
- That an annualised salary is payable
- The award provisions which are satisfied or included in the annualised salary (eg; Clause XX Penalty Rates, Clause XX; Allowances etc)
- The method of calculation of the annualised salary, including separately identifying each component including overtime and other penalty provisions, as well as any assumptions used in the calculation
- The maximum, or outer limit, of ordinary hours that the annualised salary provides for (noting that working in excess of these hours would attract remuneration in excess of the annualised salary, paid in accordance with the applicable modern award)
- The maximum, or outer limit, of overtime hours that the annualised salary provides for (noting that working in excess of these hours would attract remuneration in excess of the annualised salary, paid in accordance with the applicable modern award)
- The business will be required to assess and review the actual hours worked by the employee and to process a “make good” payment, within 14 days for any hours over the maximum worked (as ordinary or overtime) that has to be paid in excess of the annualised salary in accordance with the applicable modern award. A record of this annual assessment review should also be provided to the employee (though this is not a requirement of the changes).
- In order to meet the assessment and review requirements record keeping requirements of start and finish times, as well as all break times must be recorded. It is a requirement of the changes that these records be signed or otherwise acknowledged by the employees as correct each pay period.
“These changes are designed to ensure the employees remain better off overall when working on an annualised salary, and that the planned modality of work, the planned roster when the salary was designed and tested, is regularly compared with the ACTUAL modality of work, and that if the two differ the employee is appropriately compensated. Such an goal is in the interest of all parties; however, the recordkeeping requirements, particularly the sign off or acknowledgement requirement, may be new for many businesses in a clerical setting particularly, so it is imperative that systems be reviewed and implemented now to ensure compliance come March” explained Elisha Radwanowski, Executive Manager for Employment and Training at ACAPMA.
“It is also worth noting that the ‘back of the envelope’ calculations that historically would have led to a salary decision are not adequate in the new framework, it is important that businesses ensure their salary calculations are complete and well documented, including provided to the staff to which they apply” continued Elisha.
ACAPMA Members are reminded that they can seek advice and assistance on the impact of annualised salaries on their business by contacting the Employment Department via firstname.lastname@example.org
- Draft Determination for the Clerks – Private Sector Award 2010, showing the new clause – https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/ma000002-draft-det-awa.pdf
- FWC Decision, showing the effected modern award – https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/2019fwcfb8583.pdf