The Fair Work Commission has determined to provide greater protections for award covered employees paid an annual salary.
The FWC decision will require employers who enter into an annualised salary arrangement to specify in writing which award entitlements are included in the salary, the method used to calculate the salary identifying each separate component and the outer limit of hours the salary covers off. Once that is established, the employer will be required to perform an annual check against the award entitlement on the hours, overtime and other benefits the employee would have received had the salary arrangement not been in place.
And to ensure that the check calculation is based on facts, the awards will now require the employer to keep daily start/finish times, unpaid breaks timing and duration. This record must be signed off each pay period by the employee.
This change is of significant consequence to most employers as many employers have been under the misapprehension that if they employ someone “on salary”, that removes both parties from the award system. This is not correct. If an award applies to the work, simply having a salary and a contract is not a means to get out of award coverage – that is an urban myth.
Those under properly constructed enterprise agreements are okay for now, but come renewal time, and the comparisons are made for the better off overall test, these new protections for salaries employees will need to be taken into account.