Do you have salaried staff?

If so, then you need to be aware of changes coming into effect on 1st March 2020. The Fair Work Commission has made some key changes to a number of awards including the Clerks – Private Sector, manufacturing and associated industries award, banking, finance and insurance, professional services and health professionals’ awards amongst others (full list at the end of this article).

Very briefly, the main changes are that the employer must advise the employee in writing:

  • how the salary has been calculated including any overtime and penalty assumptions used
  • which provisions of the award the salary satisfies (penalties, loadings, allowances etc)
  • what is the outer limit of hours an employee can work before penalty rates apply
  • demonstrate how the salary is better off than the award.

Furthermore, every 12 months the employer must calculate how much the employee would’ve been paid under the award and if it was more than what has been paid to them under the salary arrangement, then the employer must pay this shortfall within 14 days. This means employers must start recording start, break and finish times for salaried staff and performing a yearly Better Off Overall Test (BOOT).

Which awards are affected?

The awards that will be impacted from 1st March 2020 are:

  • 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

# These awards only permit annualised wages when there is a written agreement between the employer  and the employee. You must provide a copy of the agreement to the employee and keep a copy for your records. Furthermore, the annualised salary arrangement can be terminated either by:

  • a mutual written agreement between the parties, at any time; or
  • either party providing written notice 12 months before the arrangement ceasing to operate.

What do I do now?

If you have employees on annualised wages or salary arrangements then you need to before 1st March 2020:

  • review the applicable award taking note of all of the allowances, loadings, penalty rates etc applicable to your employees
  • complete an initial BOOT to ensure that your salary arrangements are in excess of what would otherwise be paid under the award
  • document the annualised salary, which entitlements it covers, the method used to calculate the salary,what the outer limit of ordinary hours are included and how hows hours in excess of that will be treated
  • implement record keeping practices to keep track of start, break and finish times. Make sure this is signed off by the employee each pay period
  • implement a yearly process to complete BOOT’s and review salary arrangements.

Failure to implement these changes will mean you are failing your obligations under the Fair Work Act (Cth) which could result in underpayment claims and severe penalties.

If you would like more information on these changes and how to conduct a BOOT, then click here to book  a free consultation. Alternatively, you could complete our free HR Audit tool to review your compliance with the Fair Work Act (Cth).