The Fair Work Commission reviews and changes annualised salary model clauses

Modern awards are regularly reviewed as part of a four-year process and the Fair Work Commission (FWC) has handed down changes related to annualised salaries for 19 modern awards, including the Clerks - Private Sector Award 2010.

The changes intend to protect employees who are paid annualised salaries to ensure that they are better off when compared to what they would otherwise have been paid under a modern award, once penalties are applied to their actual hours of work.

These changes will only be included in modern awards that already contained annualised salary clauses. There are 4 model clauses to be implemented, one for employees working relatively regular hours and a second for those employees working highly variable hours, or significant amounts of ordinary hours that would attract penalty rates under the modern award.

The remaining two model clauses are applicable only to the Marine Towage Award 2010 and the Hospitality Industry (General) Award 2010. These require a minimum percentage increment to be added to the base award rates for annualised salaries.
These model clauses will impose a number of compliance obligations on employers engaging employees on annualised salary contracts, including:
  • Employers must advise employees in writing of the arrangements
  • Records must be retained relating to:
  • A detailed calculation for the salary including breaking down of the wage categories and the overtime or penalty assumptions
  • The upper limit of ordinary hours requiring penalty rates under the award
  • The upper limit of overtime hours which the employee may be expected to work in any pay period without receiving payments in addition to salary
  • Employers are required to make additional payments to employees where hours are worked outside of the upper limits specified in their agreements
  • Employers keep a record of start and finish times along with any unpaid break times
  • Employers must conduct a reconciliation of the salary paid versus what would have been paid if all of the penalties and provisions of the applicable modern award were applied.  If there is any shortfall, this amount must be paid within 14 days.
Employers offering annualised salary arrangements should review their processes to ensure that the above requirements are met in transitioning to the new model clauses.