Fair Work Comission – Annualised Wage Arrangement – March 1, 2020

A recent decision of the Fair Work Commission changes the an Annualised Wage Arrangement provisions in a range of Modern Awards.

03/25/2020

Background

A recent decision of the Fair Work Commission changes the an Annualised Wage Arrangement provisions in a range of Modern Awards. From 1 March, 2020, employers may enter into such an arrangement with employees under the following 18 awards:

Banking, Finance and Insurance Award 2020

Legal Services Award 2020

Pharmacy Industry Award 2010

Broadcasting, Recorded Entertainment and Cinemas Award 2010

Local Government Industry Award 2010

Rail Industry Award 2010

Clerks—Private Sector Award 2010

Manufacturing and Associated Industries and Occupations Award 2010

Salt Industry Award 2010

Contract Call Centres Award 2010

Mining Industry Award 2010

Telecommunications Services Award 2010

Horticulture Award 2010

Oil Refining and Manufacturing Award 2010

Water Industry Award 2020

Hydrocarbons Industry (Upstream) Award 2020

Pastoral Award 2010

Wool Storage, Sampling and Testing Award 2010

At a later time, with no set date, the same or similar provisions will come into effect for these additional awards:

Health Professionals and Support Services Award 2010

Hospitality Industry (General) Award 2010

Marine Towage Award 2010

Restaurant Industry Award 2010

Submissions are still being heard by the Fair Work Commission in regards these four awards.

It is important to note that you are not obliged to enter into an Annualised Wage Arrangement as set out in the relevant Awards from 1 March, 2020, or otherwise as later determined by the Fair Work Commission, and nor are you necessarily obliged to make any changes to current contracts which contain annual salaries and provisions that the salary fully compensates the employee for entitlements under the relevant award. We suggest you get your own advice on the benefits and risks before deciding whether to enter into a new Annualised Wage Arrangement.

If you do however, enter into a new Annualised Wage Arrangement with any members of your workforce, Humanforce can help enable you to be compliant. Here’s how.

The Annualised Wage Arrangement

Of course, a new Annualised Wage Arrangement means you will probably need a new contract (again, Humanforce suggests you get your own legal assistance to write up the contract). Any arrangement must include an outer limit for Overtime and Penalty hours. The outer limits can be configured in Humanforce, much the same way as an award is configured.

You are technically not obliged to pay any Overtime and Penalties over the outer limits in the relevant pay period. You can pay them as part of an annual reconciliation which we will expand on further below. However, Humanforce recommends you make the extra payments within the pay period, as they are real costs of that period, and cannot be offset in another period.

Humanforce allows you to:

  • Set up any number of variants of an Annualised Wage Arrangement
  • Accurately cost a roster, taking into account over-outer-limits costs
  • Pay salary and any over-outer-limits costs within the pay period
  • Accommodate employees on an Annualised Wage Arrangement paid half in arrears, half in advance

Annual Reconciliation

Every 12 months, or on termination, you are obliged to calculate the total amount an employee would have been entitled to under the relevant award over the relevant period. If this is greater than the total paid under the Annualised Wage Arrangement, you have 14 days to pay the difference.

Humanforce allows you to:

Humanforce is building a report which will satisfy this annual reconciliation requirement. It will be available in Humanforce Data Insights by the end of March 2020.

Timekeeping

For any employee on an Annualised Wage Arrangement (or indeed any arrangement which requires periodic reconciliation with an award), a record of their time worked must be kept. In other words, timesheets (starting and finishing times of work, and any unpaid breaks taken).

Humanforce allows you to:

Humanforce has a range of options for the capture of time and management of timesheets, including clocking on a web kiosk, with PIN or biometric identity verification (finger vein scan or face recognition), and clocking via mobile app, with optional geo-fencing (so you can only clock on and off where you are supposed to be).

Employee Confirmation

Employees on an Annualised Wage Arrangement are required to confirm that their timesheets are an accurate record of time worked.

Where the timesheets are started and ended digitally by the employee, this requirement is considered satisfied, as long as the timesheets are not altered before being processed for pay. The system should allow the employee to acknowledge the accuracy of the time for each cycle.

There are a number of likely scenarios in which a manager may alter a timesheet before approval (say an employee forgets to clock off) and the system needs to accommodate this.

Humanforce allows you to:

Humanforce is in the process of developing the added requirements of Employee Confirmation with our legal advisers. A digital acknowledgement feature is in production.

Once timesheets are finalised for pay, any employees under an Annualised Wage Arrangement will receive a notification, showing their hours worked for the period, which they will need to acknowledge. Clients will be notified as soon as this employee friendly and employer compliant version is ready.

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