Updated: Feb 25, 2020
Commencing 1 March 2020, the Fair Work Commission will implement changes to 18 Modern Awards as part of the four-yearly review. If you have employees paid an annual wage or salary, these changes may affect you.
The changes relate to how employees on annualised wages are paid and reported on, including employer obligations surrounding record-keeping, payment of entitlements, annual reconciliations and notifying or agreeing on the employee’s salary.
Below is a summary of what awards are affected, what the changes are and recommendations on how to implement into your workplace.
1. What awards are affected?
A list of the modern awards that will be affected is set out below,
Awards where the employer is able to pay an annual salary under the annualised salary provisions in awards WITHOUT employee agreement
Banking, Finance and Insurance Award 2010
Clerks – Private Sector Award 2010
Contract Call Centres Award 2010
Hydrocarbons Industry (Upstream)
Award 2010 Legal Services Award 2010
Mining Industry Award 2010
Oil Refining and Manufacturing Award 2010 (clerical employees only)
Salt Industry Award 2010 T
Telecommunications Services Award 2010
Water Industry Award 2010
Wool Storage, Sampling and Testing Award 2010
Awards where the employer is able to pay an annual salary under the annualised salary provisions in awards BUT ONLY WHERE EMPLOYEE AGREES
Broadcasting and Recorded Entertainment Award 2010
Local Government Industry Award 2010
Manufacturing and Associated Industries and Occupations Award 2010
Oil Refining and Manufacturing Award 2010 (non-clerical employees)
Pharmacy Industry Award 2010
Rail Industry Award 2010
Horticulture Award Pastoral Award 2010
Awards where the new requirements will be introduced at a later date (which is yet to be determined) – employer able to pay an annual salary under the annualised salary provisions in awards BUT ONLY WHERE EMPLOYEE AGREES
Health Professionals Award 2010
Awards where the new requirements will be introduced at a later date (which is yet to be determined). Where an annual salary is paid to a non-managerial employee this must be BY AGREEMENT. The annual salary must be an amount not less than a specified percentage above the minimum weekly wage set out in the modern award.
Marine Towage Award 2010 Restaurant Industry Award 2010 Hospitality Industry (General) Award 2010
2. What the changes are!
While there will be slight differences between awards, all will require a written record of:
The annualised salary you pay.
Which provisions of the award you satisfy by paying the annualised salary.
The method you used to calculate the annualised salary, including the methods used to calculate each component such as overtime and penalty assumptions.
Overtime hours which the employee may have to work.
Timesheet start and finish times (including any unpaid breaks) that employees must then sign or acknowledge stating the records are correct.
Employers will also be required to conduct annual employee audits from the commencement of the annualised salary arrangement or upon the termination of the individual’s employment.
The audit must calculate the amount of remuneration the employee would have received had they been paid in accordance with the award provisions. Any shortfall identified in the audit must be paid to the employee within 14 days.
It’s important to understand that failure to comply with these new changes will be treated just like any other breach of a Modern Award, meaning employers may be subject to significant penalties if they fail to comply.
3. Recommendations on how to implement into your workplace
Implement Payroll Software that keeps up with changes, has in-built awards and pay conditions rules, online timesheets and leave management, and can easily produce reports and data you need, such as data to conduct an annual audit.
Essential HR, powered by Employment Innovations provides template documents that will meet the new documentation requirements in all the modern awards affected. This will be available free of charge to all our clients on Essential, Professional and HR Partner subscriptions (which all include unlimited access to HR documents).
The changes to annualised salary provisions are complex. Essential HR and Employment Innovations offer products and services that can make the transition easy and stress free. To find out more visit www.esshr.com.au or drop us an email at email@example.com