Given the additional pressures that Covid-19 placed upon employers over the past year, many may have overlooked or were unaware of an important change that came into effect from March 1, 2020.
Consequently, it is important that you review the information that we have put together for you below to determine if you need to undertake further work to comply. Otherwise, significant penalties of up to $60,000 per employee may apply!
Last year, the Fair Work Commission introduced changes to the way annualised salaries are applied for over a dozen modern awards. This annualised salary changes reminder is here to help! From 1st March 2020, businesses that employ people under any one of these awards must:
- Keep a record of all hours worked (including start, break and finishing times)
- Compare the hours worked and wages paid with the minimum entitlements under the award on an annual basis, or when an employee exits the company.
- If an underpayment is uncovered, employers must make up the difference within 14 days of discovering the underpayment.
Maintaining a record of all hours worked by affected employees is mandatory. Failing to do so can incur fines of up to $60,000.
It’s been almost 12 months since the annualised salary changes took effect, which means it’s time to reconcile the hours work and the wages paid with the minimum entitlements under the relevant award. You should have already done this for any employees who left your employment since 1 March 2020.
Which of my employees apply?
Employees working under the following awards must be paid in accordance with the annualised salary changes:
- Clerks Award
- Banking, Finance, and Insurance Award
- Broadcasting Award
- Contract Call Centres Award
- Hydrocarbons Industry (Upstream) Award
- Legal Award
- Local Government Award
- Manufacturing Award
- Mining Award
- Oil Refining and Manufacturing Award
- Pharmacy Award
- Rail Award
- Salt Award
- Telecommunications Award
- Water Award
- Wool Award
We’re still waiting to hear from the Fair Work Commission about when these changes will apply to the following awards:
- Health Services Award
- Hospitality Award
- Marine Towage Award
- Restaurant Award
Can’t I apply the better off overall test (BOOT)?
The BOOT only applies to enterprise agreements. If you don’t have an enterprise agreement, and you employ someone under the above award, you must reconcile their total hours worked and wages earned with the minimum entitlements under the relevant award.
I haven’t been keeping a record of my affected employees’ start, end and break times; what should I do?
Start! Use a timesheet application that is employee friendly and make sure to explain to employees why they need to be filling in timesheets. Salaried staff aren’t used to submitting timesheets, so getting them on board may be the biggest hurdle.
If you’re using software with modern award interpretation (such as Key Pay), then your employees should have been paid the entitlements under the award. If you’re not using payroll software with modern award interpretation, use the hours and wage data you do have to compare it with the minimum entitlements under the award. If you notice an underpayment, pay it within 14 days.
Many of these changes require the advice of a HR expert. If you are unable to understand how these new rules apply to you, we can provide referrals to a number of experts in this area, if requested.
As always, we are here for you and happy to assist in any way we can! Please do not hesitate to give us a call.