There are new terms about using annual wage arrangements in the:
- Health Services Award
- Marine Towage Award.
These arrangements, sometimes called annualised salaries, can be made from the first full pay period on or after 9 May 2022.
An annual salary can’t be less than the minimum entitlements an employee is entitled to under the award or registered agreement that applies and the National Employment Standards.
There are requirements that employers need to meet when setting an annual salary. An award, contract or registered agreement can outline these requirements.
Health Services changes
Under the Health Services Award, full-time employees can agree to be paid an annual wage instead of a weekly or hourly pay rate if they’re classified as:
- Support Services levels 8 or 9
- Health Professional levels 2 to 4.
An annual wage under the Health Services Award can compensate an employee for their award minimum:
- wages
- allowances
- overtime, penalty and shift rates for a limited number of hours
- leave loading.
Employees and employers can end an annual wage arrangement:
- at any time, by agreeing in writing that the arrangement is ending
- by giving the other party 12 months written notice that the arrangement is ending.
Written annual wage arrangement
The annual wage arrangement needs to be in writing and explain:
- the annual wage that will be paid
- which award entitlements are included in the annual wage
- how the annual wage has been calculated, including any assumptions used in the calculation
- the maximum (or ‘outer limit’) penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.
Employers have to give their employees a copy of the arrangement.
Record-keeping
The employer needs to record the employee’s:
- start and finish times
- unpaid breaks.
Employees then sign the record of hours, either in person or electronically, at the end of every pay period or roster cycle. This record is used for annual reconciliations.
Overtime and penalty rates
An annual wage doesn’t mean an employee isn’t paid overtime or penalty rates. If an employee works for more than their agreed maximum (or ‘outer limit’) overtime or penalty hours in a pay period or roster cycle, they need to be paid for the extra hours at the overtime or penalty rate in the award.
Annual reconciliations
Employers have to undertake a reconciliation of the employee’s annual wages:
- every 12 months after the arrangement starts
- when the arrangement or employment ends.
If the amount actually paid to the employee is less than the award payments that they would have been paid under the award, their employer has to pay them the difference within 14 days.
Marine Towage changes
Under the Marine Towage Award all full-time employees can agree to be paid under an annual wage arrangement.
An employee’s annual wage:
- needs to be at least 40% more than the award minimum weekly wage for their classification multiplied by 52
- can’t be less than what they would’ve been paid over the year if they were paid all of their award entitlements for their work.
Employers need to make sure the employee’s annual wage is high enough to cover the award entitlements that they’ve included in the arrangement, which can include:
- minimum wages
- overtime and penalty rates for a limited number of hours
- public holidays.
Employees and employers can end an annual wage arrangement:
- at any time, by agreeing in writing that the arrangement is ending
- by giving the other party 12 months written notice that the arrangement is ending.
Written annual wage arrangement
The annual wage arrangement needs to be in writing and explain:
- the annual wage amount
- which award entitlements are included in the annual wage
- the maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.
Employers have to give their employees a copy of the arrangement.
Record-keeping
The employer also needs to record the employee’s:
- start and finish times
- unpaid breaks.
Employees then sign the record of hours, either in person or electronically, at the end of every pay period or roster cycle. This record is used for annual reconciliations.
Overtime and penalty rates
The maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can be required to work in a pay period or roster cycle without extra payment is:
- 20 ordinary hours that are normally paid at a penalty rate per week, and
- 15 overtime hours per week.
If an employee works more than their agreed maximum (or ‘outer limit’) number of overtime or penalty hours, they’re entitled to be paid at the overtime or penalty rate provided by the award for the work performed.
Annual reconciliations
Employers have to undertake a reconciliation of the employee’s annual wages:
- every 12 months after the arrangement starts
- when the arrangement or employment ends.
If the amount actually paid to the employee is less than the award payments that they would have otherwise received, their employer has to pay them the difference within 14 days.
