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Annualised Salary Changes

Published March 06, 2020 (last updated June 24, 2020) -
employee checking her annual salary

New annualised salary provisions for full-time employees have been inserted into a range of Modern Awards. The new provisions come into effect from the first full pay period, on or after 1 March 2020.

The changes are set to have a significant impact on the way businesses in certain industries manage and implement payment arrangements for their staff.

Why The Changes?

Australia’s growing underpayment crisis has raised concerns about the reliability of annualised salary arrangements under Modern Awards. Specifically, there are concerns about the effectiveness of these provisions in ensuring that minimum terms, conditions and entitlements of full-time employees are being met.

Although most entitlements should already be accounted for, salaried employees do not typically record their time and attendance. This can make it a nightmare for employers to accurately calculate the entitlements of full-time Award employees who are paid an annualised salary.

As part of the four-yearly review of Modern Awards, the Fair Work Commission has introduced these new provisions as a way to ensure minimum entitlements are being met for Award employees who are paid on an annualised salary.

What Do Employers Need To Do?

  • Advise employees in writing of the annual salary that is payable, and which provisions of the Award are satisfied by the annual salary
  • Advise employees in writing of the method of calculating the annual salary, and what the outer limits are for additional overtime and penalty rate hours that can be worked without the employee being entitled to further payment
  • Pay employees accordingly where hours are worked in excess of the identified outer limits
  • Ensure employees’ start and finish times (including unpaid breaks) are recorded, and are acknowledged by the employees in writing each pay period
  • Conduct a reconciliation of what the employee was actually paid, against what the minimum entitlements are under the relevant Award, on an annual basis or upon termination of employment (whichever is sooner), and pay any underpayment to the employee within 14 days

Worried About Underpayments?

If you seek and follow our Advice and still underpay, we’ll cover the underpayment bill. That’s the Employsure Wage Guarantee.

In addition to the above requirements, some Awards will also require employers to obtain the employee’s consent to enter into an annualised salary arrangement. Further In order to terminate an annualised salary arrangement under some Awards, the employer must give 12 months’ notice (unless the employee agrees to terminate this earlier).

Who do the changes apply to?

The changes apply to employers who engage employees under the following Awards:

  • Banking, Finance and Insurance Award 2010
  • Broadcasting, Recorded Entertainment and Cinemas Award 2010 (Change only applies to: Journalist Grade 5 or above)
  • Clerks – Private Sector Award 2010
  • Contract Call Centres Award 2010 (Change only applies to: Principal Customer Contact Leader, Clerical and Admin Level 5 and Technical Associate)
  • Horticulture Award 2010
  • Hydrocarbons Industry (Upstream Award) 2010
  • Legal Services Award 2010
  • Local Government Industry Award 2010
  • Manufacturing and Associated Industries and Occupations Award 2010 (Change only applies to: Supervisor/Trainer/Coordinator Level I or II)
  • Mining Industry Award 2010
  • Oil Refining and Manufacturing Award 2010 (Change only applies to: clerical employees)
  • Pastoral Award 2010
  • Pharmacy Industry Award 2010 (Change only applies to: Pharmacist or a Pharmacy Assistant Level 4)
  • Rail Industry Award 2010
  • Salt Industry Award 2010
  • Horticulture Award 2010
  • Telecommunications Services Award 2010 Change only applies to: Principal Customer Contact Leader, Clerical and Admin Level 5and Telecommunications Associate)
  • Water Industry Award 2010 (Change only applies to: Level 9 and 10 Employees)
  • Wool Storage, Sampling and Testing Award 2010

Advice To Employers

  • Review the list of affected Awards and assess whether these include any of your employees.
  • Take steps to be compliant as soon as possible.
  • Make sure you have adequate processes and systems to record employee start, finish and break times.
  • Make sure affected employees sign off on those records, either physically or electronically each pay period.
  • Ensure you have the adequate processes and systems to reconcile what the employee was actually paid, and what they are entitled to under their award, on a 12 monthly basis or upon termination of employment (whichever is sooner).

We’re Here to Help

If you need advice and support in understanding the changes and implementing them in your business please contact us to speak with one of our consultants.

About Employsure

Employsure is Australia’s largest workplace relations specialists. We take the complexity out of workplace laws to help small business employers protect their business and their people.

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