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The first annual reconciliation of annualised salaries under modern awards is approaching 1 March 2021

Many of you will recall the changes made to a number of modern awards on 1 March 2020.

These changes placed new obligations on employers who pay an annualised salary to:

  1. Advise the employee in writing and keep a record of:
  • What is incorporated into the annualised salary
  • The method in which the annualised salary has been calculated, including a breakdown of the penalty rates, overtime, allowances etc incorporated
  • The outer limits for each of the above penalty rates or overtime that can be worked before additional payment is owed to the employee

The second obligation, which occurs on an annual basis (the 1st of March each year) is for employers to calculate the amount of remuneration that would have been payable to the employee under the provisions of the award over the previous 12 months and compare it to the amount of the annualised wage actually paid to the employee.

Where the latter amount is less than the former amount, the employer is required to pay the employee the amount of the shortfall within 14 days.

In order to meet the above requirements, the employer has been required to keep a record of the start and finish times of work (including unpaid breaks) for an employee paid an annualised salary under a modern award for the preceding 12 months. This record must be acknowledged by the employee each pay period.

It is critical that employers get this process right now to avoid future underpayment issues, which can be incredibly costly.

Further information regarding the annualised wage changes that came in on 1 March last year can be found in our Liquid HR webinar available here – https://liquidhr.com.au/2020/02/annualised-salary-provisions-webinar/

A common misconception among many employers is that modern awards don’t apply to their workplace or all employees are paid well above the award, so they are fine. It is in these instances where we see significant risks regarding non-compliance and underpayment of wages claims.

If we can support with award coverage, annualised salaries or ensuring you are compliant with the applicable modern award/s, please contact us on 1300 887 458 and speak with one  of our HR Consultants. If you are interested in learning more about our HR services, including HR OutsourcingHR ConsultingHR Advisory Services, contact us at enquiries@liquidhr.com.au