Most Australian employees are covered by a Modern Award, which sets the minimum entitlements for employees working in any one of over 150 industries.  Some employees can be covered by two or more Modern Awards where their duties do not fall squarely within the definition of a single industry.

Modern Awards are complex, lengthy documents that can almost require a legal degree to comprehend.

Understandably, many employers choose to enter into “flat rate” or “all in” arrangements with their employees, whereby they pay an annual salary in exchange for the employee’s entitlements under the Modern Award. By doing this, employers avoid having to manage the complexities of hourly rates, overtime, allowances and other obligations that can arise under the Award system.

However, from 1 March 2020, several Modern Awards will include a new clause requiring employers who have entered annualised salary arrangements with their employees to, among other things:

  • Notify employees in writing of the salary payable and the clauses of the Modern Award that are satisfied by the salary;
  • Record the ‘outer limits’ of the number of overtime hours or other penalty-rate hours which are to be taken as paid by the annualised salary arrangement;
  • Every 12 months, or upon termination of employment, compare the annual salary paid with what the employee would have earned under the Modern Award, then pay any shortfall to the employee within 14 days.

This will invariably require many employers to re-draft employment contracts that include annualised salaries. If you need assistance re-drafting your employment contracts or require advice on your obligations under the new Modern Award Annualised Salary clauses, contact us today.

If you would like James to address a particular legal issue, send your request to james.blaxland@ticliblaxland.com.au

This article is intended to be for information and educational purposes only and cannot be relied upon as legal advice. The information may not apply to your circumstances or to your particular situation. If you need specific advice or you have any questions, we welcome you to contact us directly.