A recent decision introduces new award requirements applicable to employees covered by awards with annualised salary clauses. These new obligations commenced 1 March 2020. 

What has changed?

Though employers should always check the award for specific compliance obligations, generally the new clauses will impose the following compliance obligations:

• The employer must advise the employee in writing of the salary and keep a record of:
  • the salary payable
  • the award provisions satisfied by the salary
  • the method of calculation
  • the outer limit number of hours which mandate a penalty rate
  • the outer limit number of overtime hours the employee may be required to work per pay period or roster cycle*
  *if the employee works additional hours of overtime, that time falls outside the annualised salary and must be remunerated separately.
• If the employee works in excess of the maximum number of overtime hours, the employer must make a separate make-up payment
• Review the salary arrangement every 12 months and pay any shortfall within 14 days
• Keep appropriate records of employee working times including unpaid meal breaks. This record should be acknowledged by the employee, either physically or electronically each pay period.

What are the risks of getting it wrong?

There are many risks of haphazardly adopting an annualised salary. You must make sure you comply with your record keeping obligations and you must consistently check and assess, is the employee receiving, as a minimum, what they are entitled to under the award?

A failure to comply will expose your business to underpayments claims as well as penalties for breaches of the modern award and Fair Work Act (Cth) 2009.

What do I need to do?

• Know what award covers your employees and whether it contains an annualised salary clause
• If you pay an employee an annualised salary, take steps to ensure the salary is compliant by 1 March 2020
• Ensure your payroll system satisfactorily records employee start and finish times (including unpaid breaks)
• Ensure employees sign off on records either physically or electronically

Support for employers

• To access the award subscription page you are required to log in to your Victorian Chamber account. If this is your first visit to our website you will be required to select ‘request a new password’ (via the login tab located in the top right hand corner of the home page) and follow the prompts.
• To access Workplace Relations Tools and Templates and the Modern awards directory click here.
• For further information relating to the changes or to subscribe to your applicable modern award contact the Workplace Relations Advice Line on 8662 5222.