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4 yearly review of modern awards – Annualised Wage Arrangements  FWCFB 8583
As part of its four yearly review of modern awards, the Fair Work Commission has determined that most employers who pay annualised salaries will, from 1 March 2020, need to ensure these arrangements are compliant with the terms of new model ‘annualised wage arrangement’ clauses.
The new model annualised wage clauses will replace annualised salary clauses which are currently included in 19 modern awards. They will also be added into three other modern awards which did not previously have an annualised salary clause.
The model clauses expand employer obligations with regards to employee notification and record keeping as well as wage reconciliation with respect to full time employees who are paid a modern award annualised salary. Employers will need to inform employees of the ‘outer limit’ of penalty rate hours and overtime hours the employee may work in a pay period before being entitled to further payment under the award. These changes are aimed at ensuring that employees are not disadvantaged by annualised arrangements.
There are four model clauses; however, only two are ready to take effect from 1 March 2020. They will be added into the following categories of awards:
Model clause 1 will be inserted into awards that cover employees who work relatively stable hours, that is:
Model clause 2 will apply to the Hospitality Award 2010 (managerial employees only). Model clause 2 has not been finalised and will not become effective on 1 March 2020.
Model clause 3 will be inserted into awards which cover employees who work highly variable hours and/or significant ordinary hours of work that attract a penalty rate:
Model clause 4 applies to the three awards that require the annualised wage to be a minimum percentage amount above the relevant base award weekly wage rate specified in the award. These awards are:
The Commission has deferred the insertion of model clause 4 into these awards, as well as deferring the insertion of model clause 3 in the Health Professionals and Support Services Award 2010 for supervisory and managerial staff, as it further considers these changes. A new operative date for these changes has not yet been determined.
The model clauses impose significant obligations on employers. There are some variations between the model clauses, specifically:
Employers must notify the employee in writing and keep a record of:
If an employee works any hours in excess of the ‘outer limit’ amounts specified in the annualised wage arrangement in a pay period or roster cycle, those hours will not be covered by the annualised wage and must separately be paid for in accordance with the applicable provisions of the modern award.
The employer is also required to keep records of the start and finish times of work, and any unpaid breaks taken, for each employee and have employees sign, or acknowledge as accurate, that record in each pay cycle or roster cycle.
The annualised wage must be no less than the amount the employee would receive under the applicable modern award had an annualised wage arrangement not applied.
Every 12 months from the date the annualised wage arrangement commenced, an employer must calculate the amount of remuneration payable under the award and compare it to the amount the employee received under the annualised wage arrangement. If a shortfall is identified, this must be rectified within 14 days.
A reconciliation must also be completed on termination of the employment (howsoever caused).
Prior to 1 March 2020, employers should:
Further information / assistance regarding the issues raised in this article is available from the authors Nick Duggal and Tim McDonald or your usual contact at Moray & Agnew.