May 13th, 2022
New annual wage arrangements, often called annualised salary arrangements, have been introduced for the Health Professionals and Support Services Award 2020 and the Marine Towage Award 2020. They can now be made from the first full pay period beginning on or after May 9. New record keeping requirements have also been introduced.
What is an annualised salary arrangement?
An annualised salary arrangement is when an employer agrees to pay their employee an annual salary that is in satisfaction of their award entitlements. This agreement must be in writing
There are certain requirements that must be met when setting out an annualised salary – these are stipulated in the award.
Health Professionals and Support Services Award 2020 (HPSS)
Full time employees at certain classifications can agree to be paid an annual wage instead of the weekly or hourly pay rate they are classified at. These classifications are:
- Support Service employees Level 8 and 9
- Health Professional employees Level 2, 3 and 4
The annualised wage arrangement allows employers and employees to agree in writing for the employee to be paid an annualised wage which in satisfaction of the following award provisions;
- Minimum weekly wages;
- Allowances;
- Overtime, weekend and other penalty rates; and
- Annual leave loading
The written agreement must clearly state the award provisions that are being satisfied. Employers must also keep accurate records of all work performed by employees on an annualised wage arrangement, including start, finish and break times.
The arrangement requires the employer to establish the outer limit of ordinary and overtime hours an employee can work respectively before additional payment is required.
It also
requires employers to undertake an annual reconciliation wherein they check the employee’s remuneration every 12 months to ensure they were paid in accordance with their minimum entitlements under the award. If any shortfall is identified, the employer must pay this shortfall amount to the employee within 14 days.
The arrangement may be terminated unilaterally by the employee upon 12
months notice, or any time by agreement between employee and employer.
Marine Towage Award 2020
The changes to the Marine Towage Award are similar. A full-time employee may agree in writing to be paid under an annualised salary arrangement. It must:
- Be at least 40% greater than the award minimum weekly wage rate for their classification, multiplied by 52
- Not be less than what they would have otherwise received if they were paid their award entitlements for their work as normal
The annual wage should be in satisfaction of their award entitlements, including:
- Their minimum weekly wages
- Overtime and penalty rates for a limited number of hours
- Public holidays
The arrangement requires the employer to establish the outer limit of ordinary and overtime hours an employee can work respectively in each pay period before additional payment is required.
In addition, the changes to the award stipulate that:
- the maximum number of ordinary hours an employee could work in one pay period without extra payment is 20 ordinary hours that would have otherwise been paid at penalty rates;
- the maximum number of overtime hours is 15
It also
requires employers to undertake an annual reconciliation wherein they check the employee’s remuneration every 12 months to ensure they were paid in accordance with their minimum entitlements under the award. If any shortfall is identified, the employer must pay this shortfall amount to the employee within 14 days.
As with the HPSS, the arrangement may be terminated unilaterally by the employee upon 12
months notice, or any other time by agreement between employee and employer.
Record Keeping Requirements
Both awards outline the new record keeping obligations of employees. Employers must record an employee’s start and finish times, as well as the time of their unpaid breaks. Employees should sign these records at the end of each pay period, and they will be referred back to during the annual reconciliations.
If I Use a Set-Off Clause with an Above-Award-Pay Rate, Do We Have to Use an Annualised Salary Agreement?
While the award does now present this option to employers, there is nothing in these changes that would prevent an employer from continuing to rely upon a set-off clause inserted into a common law employment contract. If you currently pay a salary to your employee using a set off clause in a common law employment contract, it is recommended to ensure you are clearly stating the award provisions which are being satisfied by the set off clause, and ensure you are regularly monitoring the employee’s hours of work and remuneration each pay cycle to ensure they are not being underpaid.
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