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Annualised salary agreements to require more administration

Annualised salary agreements to require more administration Following a review by the Fair Work Commission it was discovered that some award covered workers being paid an annualised salary were paid less than they ought to have been under the award. As a result, the implementation and management of annualised salaries under award provisions is about to get considerably more difficult for employers.

Annualised salary arrangements allow employers to substitute a fixed annual wage in place of a range of award entitlements – namely entitlements such as allowances, penalties, overtime and leave loading. While this may have been relatively simple in the past, new regulations to be introduced from 1 March 2020 may make this more complex for employers.

From 1 March, an employer may pay an employee a fixed full-time wage which meets an agreed upon rate that encompasses other entitlements, however the employer must also inform the employee in writing of the wage to be paid, each provision satisfied by the fixed annual salary, how the annualised salary is calculated, the number of standard working hours after which penalty rates would normally kick in, and the number of overtime hours that may be required.

Any overtime must be paid separately at the rate that would be otherwise required of the award agreement.

Furthermore, annualised wage arrangements must be reviewed by the employer every 12 months after the agreement is enacted. Any shortfall in award must be paid out to the employee within 14 days.

The employer must keep a record of employee hours – including unpaid break time. The employee must sign and agree to this record if it is found to be correct.

Bear in mind this is not a complete or exhaustive explanation of the changes to annualised wage arrangements, however it is easy to see how this may vastly increase the administrative burden on an employer.

While Sybiz is not able to provide advice on how employers should manage these agreements in future, it has been recommended by others that employers should review annualised wage agreements before 1 March 2020. This may include seeking legal advice from a workplace law expert.

Any businesses continuing with annualised wage agreements should make use of a comprehensive payroll and HRM solution to ensure agreement documentation and time-sheet recordings are kept in a unified, secure system for accountability.

You can read more about the ruling and implications on annualised wage agreements on the Fair Work Ombudsmen website.

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