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Annualised Salary Reconciliation Reminder

Published April 08, 2021 Author: Employsure
An Employer using the Annualised Salary Calculator to reconcile her Employee's Annual Salary with the Award.

Although some awards already contained annualised salary provisions, for example the Hospitality Industry (General) Award and Restaurant Industry Award, standard annualised salary provisions were introduced into a number of awards from the first full pay period on or after 01 March 2020 (see the list of awards below).

Annualised Salary Provisions

The awards below contain a clause where an employer can choose to pay their full-time employees an annual salary to cover some or all entitlements under the award, though for some awards employee consent may be required, and the provisions only apply to some full-time employees based on their classification or role. The annual salary must be high enough to cover all the award entitlements (including overtime and penalty rates) that the employee would have been paid for the hours they worked over the twelve-month period for which the salary is paid.

The business needs to keep track of all the hours the employee has worked and when they worked them, including unpaid breaks taken, so that at the end of each year, or at any time the employees’ employment ends or for some awards when the annual salary arrangement ends, the employer can check that they have paid the employee the right amount. The employer does this by comparing what they have paid the employee with what they should have paid the employee for the hours worked during that period under the applicable award. This is called reconciliation.

BrightHR has a Blip tool which allows employees to clock on and off so you can track their time and location. You can generate a report that will show the number of shifts and hours worked, breaks and their duration and the total number of hours worked excluding those breaks.

When To Reconcile

Depending on when you introduced annualised salary provisions into your business, you may need to reconcile from 01 March 2021 if your full-time employee was on an annualised salary arrangement on or before 01 March 2021 and is still employed within the business.

Otherwise, you need to reconcile every 12 months from the day the annual salary arrangement started, provided the employee remains employed; when their employment ends, or for some awards when the arrangement to provide an annual salary ends.

How To Reconcile

You can include various entitlements in your annual salary arrangement other than just wages depending on the award that applies, for example overtime, penalty rates, allowances and leave loading. However, you do need to advise the employee in writing and keep a record of exactly what is included in the salary, (e.g. two hours of overtime a week) and make sure the salary is high enough to cover all the entitlements that are included.

Employsure has many resources to help you understand annualised salaries and assist you with reconciliation. For example, we can help you keep track of your employee entitlements with BrightHR, and help you reconcile with our free online Annual Salary Calculator and accompanying video tutorial.

When calculating the salary paid to the employee for the relevant period, make sure you include all the award entitlements that apply, including periods of paid leave, but don’t count those periods that the employee was on unpaid leave or wasn’t entitled to any pay, for example if they were lawfully stood down. BrightHR and Blip 4.0 allow employees to clock on and off so you can track their time and location, and manage leave requests and monitor absence on the go.

Loaded Rates And Annualised Salary Provisions In Other Awards

Employers who pay an employee who is covered by an annualised salary provision in an award listed below a “loaded” or all-inclusive rate, also have an obligation to conduct a reconciliation annually. To ensure compliance with the award, you should therefore have an agreement in place stating exactly what entitlements are included in the rate to meet the applicable award requirements.

As mentioned previously, some awards, such as the Hospitality Industry (General) Award and Restaurant Industry Award contain annualised salary provisions that pre-date the 1 March 2020 amendments.

For these awards, you can apply the provisions in the award or include a loaded rate or annual salary arrangement in the employment contract, where you “off-set” any award entitlements owing against the amount of annual salary you are paying the employee. Again, you will need to include in the contract what entitlements are covered by the salary and make sure the salary is high enough to actually off-set them.

Shortfall

If after you do a reconciliation you find that the amount you have paid the employee doesn’t actually cover their minimum entitlements under the applicable award, then there is what is called a shortfall.

In case of a shortfall, you have 14 days from the date you carried out the calculation to pay the employee the difference.

BrightHR

You can manage and keep track of employee rosters, timesheets, leave and absenteeism to enable reconciliation of salaries annually with BrightHR. You can generate and print reports, and then store wage and time records and related documents securely in the cloud to comply with your record-keeping requirements. You can find out more here.

BrightHR helping you manage your people and business

Contact us to find out how BrightHR people management software can help you manage and store your essential employee records and documents.

List Of Awards With Annualised Salary Provision Applicable From The First Full Pay Period On Or After 01 March 2020

There are differences in the application of the annualised salary provisions to the Groups 1a and 1b Awards, and annualised salary provisions may not apply to all classifications under each award. Call us for free initial advice on how the annualised salary provisions in your award may apply to your business on 1300 207 182.

Group 1a

  • Banking, Finance and Insurance Award 2020
  • Clerks – Private Sector Award 2020
  • Contract Call Centres Award 2020
  • Hydrocarbons Industry (Upstream) Award 2020
  • Legal Services Award 2020
  • Mining Industry Award 2020
  • Oil Refining and Manufacturing Award 2020
  • Salt Industry Award 2020
  • Telecommunications Services Award 2020
  • Water Industry Award 2020
  • Wool Storage, Sampling and Testing Award 2020

Group 1b

  • Broadcasting, Recorded Entertainment and Cinemas Award 2020
  • Horticulture Award 2020
  • Local Government Industry Award 2020
  • Manufacturing and Associated Industries and Occupations Award 2020
  • Oil Refining and Manufacturing Award 2020
  • Pastoral Award 2020
  • Pharmacy Industry Award 2020
  • Rail Industry Award 2020

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About Employsure

Employsure is one of Australia’s largest workplace relations advisers to small- and medium-businesses, with over 25,000 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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