CHANGE IS COMING FOR SALARIED EMPLOYEES

Back in March 2019 we first highlighted that there is change coming for employees who are paid using an annualised salary and covered by certain Modern Awards (check out a list of the affected Awards below).

It’s taken a good few months but late last year the Fair Work Commission (FWC) announced the model clauses that would be added to these Awards; confirming the requirements of employers who have team members covered by them. These changes will come into effect from 1 March 2020, so time is of the essence!

One of the Awards is the Clerks – Private Sector Award, which covers administrative roles (including some marketing, finance, and general admin); so, these changes will impact a LOT of businesses.

If you’re interested in the nitty gritty you can see the full detail from the FWC decision here, otherwise we’ve popped together our wrap up below.

REMIND ME AGAIN WHAT WE’RE CURRENTLY DOING?!

This does differ between Awards but, most commonly employees must be informed what provisions of the Award their salary is intending to cover (e.g., leave loading, overtime rates, allowances, etc), and ensure that their salary is equivalent to, or higher than, what they would be entitled to if they were paid on an hourly basis for completing the same work.

The main concern of the FWC seems to be that there is currently no requirement for any evidence to be collected or provided to the employee that they are not disadvantaged by this arrangement, or any concrete way for employer or employee to know if this is the case.

SO, WHAT ARE THE CHANGES?

To ensure there is more transparency in the calculation of annual wages, and that reviews are occurring regularly, the changes require employers to:

  • Outline the specific method of calculating the annualised salary based on the provisions of the Award and provide to this info to the employee;
  • Keep records of the hours worked each day, including starting and finishing times, and unpaid breaks, and have the employee sign off on this record each pay period;
  • Utilise the records above to review each employee’s arrangement annually and reconcile any underpayment compared with the minimum entitlements of the Award;
  • Set an outer limit of ordinary hours and overtime hours to be worked, and where employees work in excess of these hours, pay additional amounts in accordance with the Award.

WHAT DO I NEED TO DO TO BE READY FOR 1ST MARCH?

Check the list below to see if any of your team members are covered by the Awards that are impacted by the changes (if none of the Awards apply to you, you’re home free – for now!)

Review and update your employment contracts to ensure they include:

  • The annualised salary on offer;
  • Which entitlements from the Award will the annualised salary cover (i.e., leave loading, overtime, penalty rates etc);
  • The method used to calculate the annualised salary with specifics for any of the entitlements the that will be covered including any assumptions made for overtime or penalty rate calculations;
  • The outer limit or maximum number of ordinary hours that are expected to be worked before being entitled to overtime or penalty rates (e.g., 4 hours per week of overtime may be calculated to be covered by the annualised salary payable).

Set up appropriate record keeping practices to track the starting, finishing and unpaid break times for any employees affected. This needs to be signed off by the employee each pay period. Depending on what systems or processes you already have in place, this could be as simple as a spreadsheet emailed each pay period, or a time sheet completed in Xero (or other payroll or HRIS software).

Set a reminder for 12 months’ time (and add an item to your end of employment checklist) to make sure you remember to conduct a review of the employee’s working hours across the year and ensure they have been appropriately paid for the hours they have worked.

Please reach out if you have any questions or require any assistance with these changes.

 

These are the Awards that will have clauses added or updated from 1st March 2020:

  • Banking, Finance and Insurance Award 2010  
  • Broadcasting and Recorded Entertainment Award 2010
  • Clerks - Private Sector Award 2010
  • Contract Call Centres Award 2010  
  • Health Professionals and Support Services Award 2010  
  • Horticulture Award 2010  
  • Hospitality Award 2010  
  • Hydrocarbons Industry (Upstream) Award 2010
  • Legal Services Award 2010
  • Local Government Industry Award 2010
  • Manufacturing and Associated Industries and Occupations Award 2010
  • Marine Towage Award 2010
  • Mining Industry Award 2010  
  • Oil Refining and Manufacturing Award 2010
  • Pastoral Award 2010
  • Pharmacy Industry Award 2010
  • Rail Industry Award 2010  
  • Restaurant Industry Award 2010
  • Salt Industry Award 2010
  • Telecommunications Services Award 2010
  • Water Industry Award 2010
  • Wool Storage, Sampling and Testing Award 2010
Written by
Kateena Mills