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Sweeping changes to annualised salaries: will your business be ready?

04 September 2019
Euro notes

In Sina Zevari’s recent article he looked at annualised salary arrangements and foreshadowed significant changes to annualised wage clauses in a large number of modern awards. In this article we take a look at some of the more onerous obligations for employers and what this could mean for your business.

Our clients often ask us “How many additional hours are ‘reasonable’?”, and the answer is not black and white.  As part of its four yearly review, the Fair Work Commission has introduced new annualised wage arrangement provisions that will help to provide a black and white answer to that question.

Affecting most modern awards currently containing annualised salary provisions (including the heavily utilised Clerks (Private Sector), Manufacturing and Restaurant Industry Awards) and adding new annualised salary provisions to the horticulture, pastoral and potentially clubs sectors, the proposed changes include:

  • A requirement that an employer must set out in writing the method used to calculate the annualised salary and setting out each component, including:
    • ­The maximum number of overtime hours which the employee may be required to work; and
    • ­The maximum number of ordinary hours that will attract the payment of penalty rates.
  • An obligation to keep records of all start and finish times (including unpaid breaks) and to maintain written or electronic acknowledgement by the employee that the times are correct, for each pay period or cycle.
  • The need for employers to, every 12 months or upon termination of the employment (whichever occurs first), compare the remuneration that would have been payable under the modern award with the annualised salary (with any shortfall to be rectified within 14 days).

The changes, which are earmarked to take effect on 1 March 2020, will likely be practically difficult and onerous for employers.

It is important for affected employers to review their current annualised salary arrangements to ensure that from March 2020 they will be compliant with the new provisions.  If you are unsure as to whether these provisions will affect your business, would like more information as to the affect upon your business or you seek specific advice, please do not hesitate to contact a member of our Australian Employment team.



We would like to acknowledge the contribution of Nicole Davis and Brittany Turner to this article.

Further Reading