With changes to the Restaurant and Hospitality Modern Award coming into effect on 1 September 2022, we thought it was time to take another look at  the recent Annualised Salary Provisions which will be in place for these awards but are already in effect in several other awards.

Today we will cover:

1. Which Modern Awards are covered by the annualised salary provisions
2. If you are covered, what are your compliance obligations
3. How they are being enforced

My name is Andrew Koleda, I am the Operations Director of On Demand HR. Since 2010 we been helping businesses of all sizes navigate through Australia’s complex Industrial Relations system.  Throughout this time we have appeared in more than 120 matters before the Fair Work Commission and other bodies.

It is really this practical experience that goes well beyond theory which allows us to offer advice and insights which balance risk against the interests of the business.  This ultimately leads to decisions and outcomes that are in line with the business objectives, and not simply based on mitigating risk.

HR Live is also a great opportunity for you to put forward any questions around HR or Workplace Relations that your business is facing and if we can, we will answer them live on the stream, however if there is a bit more to unpack we will cover the topic in a future session.  Alternatively we give you an opportunity to schedule a free HR Consultation supported by a strategic action plan with one of our experienced HR consultants.

Right, with that out of the way, let’s get into this weeks topic.

Firstly, as we can see on the screen at the moment, there are a lot of Modern Awards that have recently been updated to include annualized salary provisions.  These award cover a wide range of industries and also include some of the most common Modern Award like the Clerks Private Sector Award.

Also highlighted at the bottom, is the Restaurant and Hospitality award which are actually what prompted us to run this session on annualized salary provisions with similar obligations as we are about to cover.

AWA’s affect full-time employees who are paid an annual wage under one of the impacted awards.

Depending on the award, annual wages arrangements can include entitlements such as minimum wages, allowances, overtime and penalty rates and leave loading.

Employers need to make sure their employees’ actual annual wage is high enough to cover the award entitlements that they’ve included in the arrangement.

So in other words, an employee’s annual wage can’t be less than what they would’ve been paid over the year if they were paid all of their award entitlements for their work.

The awards also have rules about, which classifications can be paid an annual wage, what entitlements can be included in the annual wage and whether the employer and the employee need to agree to the arrangement.

As each award is slightly different, it’s important that you read the annual wage arrangement clause in your award.

So putting this all together, what are the business obligations and compliance considerations for Annualized wage agreements?

Arrangements must be in writing and include the annual wage paid, what award entitlements are included, how the wage has been calculated and the outer limit of penalty hours within a pay period or roster cycle without extra payment.

Obligation to record the employees start and finish times & any unpaid breaks taken.

Employee acknowledgement of the number of hours worked at the end of each pay period or roster cycle.

Once agreed, either party can end the agreement with 12 months notice or by mutual agreement (specific awards).

Undertake a reconciliation of employees annual wages against award entitlements:

• Every 12 months after the agreement starts; or
• When the arrangement ends; or
• When the employment ends.

First 12 months reconciliation was in March 2021.

This is following the crackdown in 19/20 on “Wage Theft” to include ignorant non compliance as well as the introduction of criminal penalties for systematic underpayments.

2019 case for MADE Establishment (Restaurant Award) penalized $7.8m as their annualized salaries were not above the award.

Increased compliance requirements for small to medium businesses.

Understand your risks – conduct a workplace relations review or schedule a free HR consultation

However, the reality is that we have yet to see across our network the FWO enforce annualized salary provisions. This may have been a result of some leniency given to businesses throughout the covid period, however there is nothing to say that this position will not change in the future.

So that’s a wrap for this weeks HR Live Session and if your business has some question around annualized salary arrangements or an other HR or Workplace relations matter, please let me introduce some of the On Demand HR team to tell you a little bit about our free HR consultation.

See you all next week!

Other resources:

https://www.fairwork.gov.au/pay-and-wages/minimum-wages/annualised-salaries