Changes to Annualised Salaries under the Modern Awards

Do you have employees on annualised salaries? Major changes to these start on 1 March 2019.

There are 23 Modern Awards that are impacted by this change. The requirements that need to be met are outlined in the relevant award.

An employer and employee can agree that an annual salary covers entitlements like:

minimum weekly wages
penalties
overtime
allowances
annual leave loading.

Salary agreement should be documented in writing and identify which entitlements are include in the payment.

What does this mean for your business?

If you already have contracts in place with annualised salaries, you will need to ensure that the arrangement now complies with these new requirements. You may need to:

Review what employees are affected
Have a system to record all hours worked each pay period and have a way for the employees to sign off or acknowledge that this is accurate
Consider whether our current annualised salary arrangement meets the new Modern Award requirements of setting an outer limit of hours that can be worked. If not, you may need to issue new contracts.

Even if the annual salary you are paying your employees is higher than what they would be entitled to under a Modern Award , you need to take steps to implement the necessary changes so that the employer (and any managers) are not at risk of penalties under the Fair Work Act 2009 (Cth) for failure to comply with the terms of a Modern Award. This can technically occur even in instances where no underpayment has been made.

If you have any questions, speak to Fair Work, or give us a call, so we can help you find the information you may need.

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