Annualised Salaries – key questions for employers
I have been recently employed by your company as a full time Graduate. My contract states that I am covered by the Clerks–Private Sector Award 2010 and I am paid an annualised salary which I understand is to encompass all minimum entitlements under the Award.
As a recent University Commerce Graduate I like to keep abreast of any changes and updates that occur within the Australian Business Market. A recent article published in Business News, “FWO changes that may impact you even if you pay above award rates” caught my attention as it outlined some key changes that the Fair Work Commission (FWC) was introducing to a number of Modern Awards from 1 March 2020.
My interest in this topic led me to further research and I came across a number of articles which provided information on annualised salaries, including what is required from employers with these changes. I am writing this confidential letter to you as I am yet to hear from you, my employer, and I have many questions on what these changes are and how they will affect me.
I have outlined my questions in relation to these changes under each of the new employer requirements below.
1. Employers are required to advise the employee in writing of the annualised salary payable to them.
My current contract isn’t clear on what is included in my annualised salary, I currently work a 5 day week, but on the occasion I also work a Saturday, is this being included in my annualised salary or is this being paid as overtime?
2. Employers must also specify the outer limit of ordinary hours that an employee may be required to work without being entitled to additional payments.
My current contract states my ordinary hours of work are 38 hours per week plus reasonable additional overtime. However, there is no reference to an outer limit. How is my outer limit derived and if I exceed the hours of work in my outer limit, what rate am I paid? How is ‘reasonable additional overtime’ factored into my outer limits?
3. Employers are required to record start and finish times and carry out annual reconciliations for employee pays.
I’m not currently required to enter start and finish times, does our current payroll system have these capabilities. Is this something that you will be introducing into the company? If I don’t enter my start and finish times, am I at risk of not getting paid?
How is the annual reconciliation carried out? When does the period start, is this based on calendar year or financial year or otherwise? How will I be notified? What happens if I leave the Company prior to the 12-month period? How is any underpayment of wages reconciled?
News outlets have been exploding over the last few months reporting on some of Australia’s larger organisations paying staff incorrectly. If large companies who have the resources (Payroll, HR departments etc) to focus on paying their people correctly, how will smaller organisations get it right?
I hope to receive a response to my questions sooner rather than later.
Is your business equipped to answer the questions raised by this Loyal Employee?
The new Annualised Wage provisions by Fair Work Commission places new and potentially onerous requirements on employers who pay annualised salaries in substitution for applicable award rates.
These changes will impact the way many companies set pay rates, employee time keeping, inform employees, reconcile payroll records and deal with potential underpayments.
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