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Award Update: New annualised salary clauses

A recent Fair Work Commission decision requires employers to make significant procedural changes to comply with new annualised salary provisions within affected modern awards.

Modern Awards: Introduction of model annualised salary clauses

The Fair Work Commission (“FWC”) has recently issued a decision that affects all modern awards containing annualised salary provisions. This decision can be accessed via the FWC website, where you can check which of your awards are affected.

The FWC has created four separate model clauses that impose significantly more stringent obligations on employers to ensure that employees who are paid an annualised salary are not disadvantaged compared to what they would otherwise receive under the award. The model clauses introduce a range of new compliance obligations. Some of these require the employer to:

  • advise employees in writing how the annualised salary has been calculated, and identify each separate component of the annualised wage that relates to any overtime, penalty and allowance assumptions used within the calculations
  • advise employees of the maximum number of overtime hours which they may be required to work in a pay period or roster cycle without receiving any excess payment above the annualised salary.
  • conduct an annual reconciliation to ensure that the employee is not paid less than the relevant modern award and back pay any shortfall within 14 days.

In most cases, the model clauses will require the employer to keep records of the above, as well as records of the employee’s start/finish times and unpaid breaks, which must be signed by employees each pay period or roster cycle.

The new annualised salary clauses will become operative on 1 March 2020.

EMA Consulting is holding a free networking session on 7 November 2019 for clients seeking further information about these changes. Detail on how to register can be accessed here.

Could you defend your own unfair dismissal claim before the FWC?

It is not an automatic entitlement for employers to appoint external legal or consulting representation to defend claims before the FWC. If the FWC rejects your request for representation, you must be adequately prepared to run the case yourself.

In a recent decision, the Litchfield Shire Council (“LSC”) sought permission for legal representation in an unfair dismissal application before the FWC. The decision can be accessed here.

The self-represented Applicant objected to the employer being represented on the grounds that she would be significantly prejudiced. LSC argued that they did not have any in-house human resource personnel, with the closest being an Acting Work Health and Safety Advisor on parental leave replacement. However, within the LSC’s own application, this person’s position title was referred to as ‘Human Resources and Work Health and Safety Advisor’. The reference to HR in the employee’s job title helped to persuade the FWC that the LSC could rely on its own employees to defend the claim before the FWC. The FWC did not grant permission and the employer was therefore required to defend the claim themselves.

What would you do?

This decision follows a line of recent decisions refusing employer representation and makes it clear that employers cannot assume that permission for legal representation will always be granted. Employers should assess whether key personnel have the knowledge and skills to appear before the FWC if the event that an application for legal representation is declined.

EMA Consulting is holding a free networking session on 7 November 2019 for clients seeking to learn more about self-representation before the FWC. Further information on this seminar can be accessed here.

Require further information/assistance?

If you require further information or advice, please contact one of our Consultants.