Employers and employees can now agree in writing for the employee to be paid an annualised wage or a salary instead of being paid an hourly rate.
NatRoad has provide an example employment contract clause formalzing the payment of an annualised salary pursuant to clause 17 of the Clerks—Private Sector Award 2010 (the Award) as of the first full pay period commencing on or after 1 March 2020.
The annualised wage agreement must take into account “ordinary hours” anticipated to be worked and “overtime” anticipated to be worked.
The annualised wage can take into account any or all of the following:
- Minimum weekly wages;
- Overtime rates;
- Shiftwork; and
- Annual leave loading.
The written agreement
The written agreement must specify the following:
- The annualised wage that is payable;
- Which provisions of the Award are included in the annualised salary;
- The method of calculating the annualised salary specifying each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation;
- The outer limit of the ordinary hours which attract penalty rates in a pay period; and
- The outer limit of the overtime hours which will be worked in a pay period, without being entitled to an extra payment (see below).
Accordingly, the keeping of accurate time and wages records is essential.
A copy of the agreement must be given to the employee, and the employer must keep a copy as a time and wages record.
If in any pay period the employee works in excess of the hours specified in the agreement as the outer limit the employee must be paid for these hours in addition to the annualised salary. Time off instead of overtime may be used for any additional overtime worked provided the employer and employee enter into the required formal agreement (refer 27.5 of the Award).
Entitlements such as annual leave and personal/carer’s leave are calculated on the award base rate not the loaded rate (refer clause 17.3 of the Award).
The annualised salary must be no less than the amount the employee would have received under
the Award for the work performed over the year of the Agreement – or less if the employment is terminated before a year.
This is similar to the BOOT test for an IFA.
Every 12 months from the commencement of the annualised wage arrangement or upon the termination of employment of the employee the employer must do a tally of the hours worked and the amounts paid to ensure that there is no shortfall. If there is a shortfall the employer must pay this to the employee within 14 days.
Records must be kept of the following:
- Starting and finishing times; and
- Any unpaid breaks taken.
It is also recommended that the times of paid breaks also be kept.
These records must be signed by the employee each pay period or roster cycle.
Resource (members only):