Are you ready for the mandatory annualised wage arrangement reconciliation?

Are you ready for the mandatory annualised wage arrangement reconciliation?

Back in February 2020, the Fair Work Commission (FWC) decided to insert detailed annualised wage arrangement provisioninto 16 modern Awards (e.g. Banking Finance, Clerks, Pharmacy etc).  

However, the FWC also mentioned in its decision that the new clause was not intended to invalidate or regulate other forms of ‘buy-out’ contractual arrangements that adequately compensates for award entitlements. 

The Hospitality and Restaurant Industry awards have existing annualised wage arrangement provisions, but these Awards also have an additional requirement whereby the employee must be paid at least 125% above their minimum Award weekly rate of pay. This is applicable to both full time and part time employees.  

The annualised wage arrangement commenced operation from 1 March 2020. Therefore, the annual deadline for annualised salary reconciliation is fast approaching 

What do I need to do and where can I get more information?  

What may be included in an annualised wage arrangement?  

  • Minimum wages;
  • Allowances;
  • Overtime and penalty rates;
  • Leave loading

However, because the clause in every Award may be different, it is important that you read the relevant Award or seek our expert advice on the Award 

What records do I need? 

  • The annualised wage arrangement records
  • Annual wage that will be paid, inclusive of Award entitlements; 
  • Record detailing how the annual wage was been calculated, including assumptions used in the calculation;  
  • The outer limit of penalty hours and overtime hours that the employee can work without extra payment.  
  • Roster and timesheets 

– Days of the week worked;  

– Start and finish times;  

– Unpaid breaks taken.  

Employees must verify that they did work those hours at the end of each week or roster cyclee.g. sign-off on their hours worked. 

What about overtime and other penalties? 

The outer limit of penalty hours and overtime hours that the employee can work should be recorded in the annual wage arrangements. In the event they work outside the outer limit, the employee is entitled to be paid their applicable award overtime or penalty rate.  

  • When does the reconciliation happen? 
  • At the end of every 12 months after arrangement starts; or  
  • When the arrangement ends; or  
  • Upon termination of employment of the employee. 

If, as a result of reconciliation, the annual wage paid is less than the award payments the employee is entitled to, the difference must be paid within 14 days. 

Getting our help 

Worried you might have a payroll and/or reconciliation issue, but do not know where to start? Call ER Strategies on 1300 55 66 37 to find out more about how we can help you be confidently compliant. 

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