Employment Law

Employment Law – Annualised Salaries – Reconciliations After 12 Months

A reminder that reconciliations for full-time employees on annualised salaries must be completed every 12 months after the arrangement starts, for employees covered by the following Awards:

  • Banking, Finance and Insurance Award 2020
  • Broadcasting and Recorded Entertainment Award 2020
  • Clerks – Private Sector Award 2020
  • Contract Call Centres Award 2020
  • Horticulture Award 2020
  • Hydrocarbons Industry (Upstream) Award 2020
  • Legal Services Award 2020
  • Local Government Industry Award 2020
  • Manufacturing and Associated Industries and Occupations Award 2020
  • Mining Industry Award 2020
  • Oil Refining and Manufacturing Award 2020
  • Pastoral Award 2020
  • Pharmacy Industry Award 2020
  • Rail Industry Award 2020
  • Salt Industry Award 2020
  • Telecommunications Services Award 2020
  • Water Industry Award 2020
  • Wool Storage, Sampling and Testing Award 2020

Employers are required to:

  1. Ensure the wage arrangements covered by the annualised salary are documented and signed off by the employer and employee
  2. Compare the amounts paid to the employee for the previous 12 months with the amounts the employee should have been paid under the applicable Award, including overtime, allowances, penalty rates etc
  3. Rectify any underpayment by paying the employee the difference within 14 days

Annualised Salaries – a Reminder

On 1 March 2020 changes implemented by the Fair Work Commission to notification, recordkeeping and wage reconciliation obligations placed on employers who pay annualised salaries to employees covered by the above Awards came into effect.

Now, where an annualised wage is paid, the employer must advise the employee in writing and keep a record of:

  1. the annualised wage that is payable;
  2. which of the provisions of the award will be satisfied by payment of the annualised wage;
  3. the method by which the annualised wage has been calculated, including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation;
  4. the outer limit number of ordinary hours which would attract the payment of a penalty rate under the award; and
  5. the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised wage.

Regarding (d) and (e) above, an employee is entitled to be paid an amount in excess of the annualised wage if, in a pay period or roster cycle, an employee works any hours in excess of either of the outer limit amounts specified. In that instance, such hours will not be covered by the annualised wage and must separately be paid for in accordance with the applicable provisions of the Award.

The amendments included recordkeeping and wage reconciliation requirements, including that at the end of each 12 months from the commencement of the annualised wage arrangement or upon the termination of employment of the employee, the employer must calculate the amount of remuneration that would have been payable to the employee under the provisions of the Award over the relevant period and compare it to the amount of the annualised wage actually paid to the employee. Where the latter amount is less than the former amount, the employer shall pay the employee the amount of the shortfall within 14 days.

For more information and expert advice, ask to speak to one of our lawyers at Ezra Legal on (08) 8231 6100 or email admin@ezralegal.com.au

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Julian Roffe

Practice Manager

Ezra Legal

Julian Roffe

Categories: Blog, Employment Law

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