Important changes to award based annualised salary requirements take effect from 1 March 2020
As part of the four-yearly review of modern awards, the Fair Work Commission (FWC) has finalised its decision with respect to the model annualised salary clauses to be inserted into 19 modern awards, including the Clerks – Private Sector Award 2010 (Clerks Award) and the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award). The changes will take effect from 1 March 2020.

The model clauses introduce a number of notification, record keeping and wage reconciliation obligations on employers who pay annualised salaries to their employees covered by the relevant modern awards.

The key changes are summarised as follows:

  • Employers must notify employees in writing and keep a record of:
    1. the annualised salary that will be paid;
    2. the clauses of the award that the salary will compensate for;
    3. how the salary has been calculated including each separate component and any overtime assumptions; the outer limit number of ordinary hours which would attract the payment of a penalty rate under the award, and the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to payment in addition to the salary.
  • Any hours worked in excess of the outer limit in each roster or pay period must be paid separately in addition to the annual salary as overtime or with penalty rates.
  • Employers must undertake an annual reconciliation each 12 months from commencement of the arrangement (or on termination) to ensure that the salary is not less than the employee would otherwise have been paid under the award. Any shortfall must be paid within 14 days.
  • For the purpose of conducting the annual reconciliation, employers must keep a record of the employee’s start and finishing times and any unpaid breaks taken. The record must be signed by the employee (or acknowledged as correct in writing), each pay period or roster cycle.

The changes are likely to affect a significant number of employers, especially given the broad coverage of the Clerks Award. The Clerks Award covers all employees “engaged wholly or principally in clerical work, including administrative duties of a clerical nature”. This would include, for example, employees who predominantly undertake reception, administrative and accounts duties. The Manufacturing Award also has broad coverage provisions.

Affected members will need to ensure that the notification requirements set out above are complied with by 1 March 2020, and the necessary arrangements are made to commence recording hours of work for annual reconciliations. Given the nature of the changes, this may impose a significant administrative burden on some employers. For specific advice on compliance obligations and assistance with related issues such as amendments to employment contracts, please contact the Master Builders SA workplace relations team.