Annualised Salary changes

As of the 1st March 2020, employers paying their staff a set annual salary need to be aware of some important and legal changes.

The Fair Work Commission is introducing changes to many of the modern awards which will effect how businesses pay their salaried employees. Each award maybe slightly different in the impact, however generally speaking these rules will come into place and need to be adhered to as of the 1st March. Some of the awards will not require the employees agreement, however others will only be effected if the employee agreed to the changes.

To break it down, the reason for these changes is that employees that are currently on salaries usually have provisions in their contract that stipulates they need to work a set amount of hours per week (usually 38hrs for Full Time) with “reasonable” extra hours if required. These extra hours are normally not paid and are expected to be included in their salary package.

The new ruling means that their will be an “outer limit” to these extra hours. Any hours worked over these limits need to be paid over and above their salary. These hours will also need to take into account any penalty or overtime rates. All of this needs to be documented and in most cases, agreed to by the employee.

But how do the employers keep a track of the hours in these cases? With a lot of the workforce now working remotely there needs to be some accountability toward recognising these hours worked. In many cases the employee work can be tracked by the time they log into their computer or server etc, however this change means that the employee will need to be accurate and trustworthy in regards to clocking their hours.

If there is any doubt then it would be highly recommended that employers implement a system that shows the clock in and clock out times of their staff working hours. There are many apps or programs that will do this – but it’s extremely important that it is done. The reason that this is essential is that every year an annual reconciliation needs to be undertaken (or upon termination of employment). If there happens to be a shortfall after this calculation it must be paid to the employee within 14days.

So to summarise – employers need to be fully aware of these changes and get assistance to review their salaried employees. Some changes may need to be undertaken, but at the end of the day – it’s what’s fair. With life and work stress, it’s important that salaried employees expectations are not overlooked and a good work/life balance is found. By ensuring that they are working reasonable hours the employees will be happier and this ALWAYS feeds through to a happy working environment.

If you need further assistance with these changes, please contact us so that we can utilise our HR resources to ensure everything is in place.

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