Annualised wage changes

The Fair Work Commission (FWC) has finalised its decision in relation to the annualised wage clauses to be inserted into 22 modern awards. With these clauses coming into effect from 1 March 2020, now is the time to understand the impact this may have on your organisation.

For employers who elect to pay employees an annualised wage under one or more of these impacted awards, they will need to address the following four points:

1. Review and amend Employment Contracts to include:

(a) the method by which the annualised wage has been calculated, including specification of each separate award component of the annualised wage and any overtime or penalty assumptions;

(b) set the outer limit number of ordinary hours in a pay period that would attract penalty rates included in the annualised wage;

(c) set the outer limit of overtime hours that the employee may be required to work in a pay period included in the annualised wage.

Note: You may need to review and amend your employment contracts for your employees. It is recommended that you seek independent professional advice for this as this is not an area ADP can advise you on.

2. Record work time and obtain employee acknowledgment:

Keep a record of the starting and finishing times of work, and any unpaid breaks taken, of each employee and have these acknowledged by the employee.

Working with an ADP workforce management and timesheet solution can capture time effectively and efficiently for this purpose.

3. Pay for hours worked in excess of "outer limits":

If hours are worked outside of the "outer limits“ for a pay period, make additional payments to employees in respect of those hours at the Award rate in the pay period.

Our workforce management solutions can provide automated methods to define these ‘outer limit’ rules and satisfy this requirement.

4. Annual reconciliation:

Every 12 months (or following termination of employment), the employer must calculate the annual amount that would have been payable to the employee under the Award (including all components) and compare that to the annualised wage paid. Any shortfall must be paid within 14 days.

ADP’s workforce management solutions can:

  • Capture employee time worked throughout the year
  • Report an award-interpreted value for comparison with actual pay
  • Help you determine where a shortfall payment is required

TAGS: Small Business Midsized Business Large Business Multinational Business HR Admin & Outsourcing Payroll Administration Risk & Compliance Payroll Compliance & Legislation Legislation Human Capital Management HR Finance Business Owner Infographic