New annualised wage arrangements.
On 1 March 2020, new annualised wage provisions will come into effect across a range of industry awards.
Employers will need to understand the requirements of the new salary provisions and ensure they’re acting on their obligations under the Fair Work Commission’s decision.
Requirements will vary slightly depending on the relevant industry award, however there are common obligations that will also need to be met.
Employer spotlight on wage under payments.
With the spotlight on employee under payments in recent months, by some of Australia’s largest and high profile corporations like Woolworths Group, George Calombaris’ MADE Establishment, Wesfarmers, Qantas, Commonwealth Bank, and the Australian Broadcasting Commission, it shows that big business is not immune to issues of managing payroll and meeting their obligations to employees.
In some instances, what was previously described as a payroll error, is now being termed ‘wage theft’. And, even if the company identifies the error and self-reports, it could still attract a hefty fine or other penalty, even in the case of accidental under payments.
What are annualised salary arrangements and what’s changing?
Annualised salary or wage arrangements may be seen by some employers as an easier way to administer wage payments for employees who are typically covered by an industry award. They’re often a salary amount that is an ‘all inclusive’ – including the base wage for the role, as well as accommodating payments for overtime, penalty rates, allowances and loadings.
The new annualised wage provisions for each industry award will be more specific in what is to be included in the calculations and how the salaries are to be calculated. In some instances it will be very prescriptive as to what employers must have in place, including written agreements, annual reviews, and written records of actual hours signed by employees.
Employers – what you need to do to comply.
For businesses operating under any industry awards who have annualised salary employees, it’s important to understand the new wage provisions that come into effect on 1 March 2020.
If you choose to pay an annualised salary above the Award provisions to make payroll easier, this change will affect you.
The main change is that you will need to have evidence that you are certain the wages you’re paying are more than the minimum required. Just having an idea that you are paying similar to other organisations or even other workers in a similar role will no longer be sufficient.
As Award provisions are complex, and business and workers’ roles change, it is easy for a wage that at one point, more than covered the minimum requirement, to slip below, leaving the organisation liable. We recommend you undertake the following steps:
- Review your processes that track and maintain time and work records against the Award provisions and ensure all staff are captured, including workers on an annualised salary;
- Review annualised staff’s salary against what they would have earnt if they had been paid as per the Award to ensure they’re better off overall (this is referred to as BOOT – Better Off Overall Test);
- Repeat this process at least annually and as Award provisions change.
Find out what you need to do to comply.
Susie, Mel and the experienced team at Masula Compliance, can provide advice and support for all of your Human Resource Management needs including ensuring you comply with these new provisions.
GET IN TOUCH TODAY TO FIND OUT MORE.