Fair Work has made changes in some employment awards starting the 1st of March 2020. These changes were introduced to reduce “wage theft” and non-compliance.
The following awards are likely to need changes to employment contracts
• Banking, Finance and Insurance Award 2010 • Broadcasting and Recorded Entertainment Award 2010
• Clerks – Private Sector Award 2010 • Contract Call Centres Award 2010
• Health Professionals Award 2010
• Hydrocarbons Industry (Upstream) Award 2010
• Horticulture Award
• Hospitality Industry (General) Award 2010
• Legal Services Award 2010
• Local Government Industry Award 2010
• Marine Towage Award 2010
• Manufacturing and Associated Industries and Occupations Award 2010
• Mining Industry Award 2010
• Oil Refining and Manufacturing Award 2010
• Pastoral Award 2010
• Pharmacy Industry Award 2010
• Rail Industry Award 2010
• Restaurant Industry Award 2010
• Salt Industry Award 2010
• Telecommunications Services Award 2010
• Water Industry Award 2010
• Wool Storage, Sampling and Testing Award
Almost all employers employ clerical and administrative employees. Given that the Clerks – Private Sector Award 2010 is one of the awards affected, many employers may need to seek legal advice to ensure award compliance.
So, what do employers need to do?
Review employment contracts and update contracts to comply with new obligations. The employer must audit annual salaries, record hours of work and back-pay any shortfall when annual salaries are audited against modern award entitlements.
What are the changes?
Depending on which awards apply to your workforce, the clauses will impose a number of requirements for employers who pay an annual wage in compensation of entitlements.
For example, a requirement is to advise employees in writing of:
- which provisions of the modern award that apply to them will be satisfied by payment of an annualised wage
- the mathematical method by which the annualised wage has been calculated, including a description of each part of the annualised wage and any overtime or penalty expectations used in the calculation
- the outer limit number of ordinary hours which would attract the payment of a penalty rate under the award and the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised wage under the award
- any excess hours of work that will not be covered by the annualised wage for which separate payments under the award would apply. Employers are required by the new clauses to implement payroll and HR practices to ensure employees are at all times adequately compensated by the annual wage, including:
- Annual calculations of what the employee would have been paid under the award compared with the annualised wage actually paid, and perform reconciliations and back-pay any shortfalls within 14 days
- Keep a record of the starting and finishing times of work, and any unpaid breaks taken, of each employee subject to an annualised wage arrangement in order to perform the calculations and reconciliations
- Records must be signed by employees or acknowledged as correct in writing (including by electronic means) each pay period or roster cycle Why have the changes been introduced? It is common practice for employers to pay an overall annual remuneration to award covered employees which is intended to “set-off” and absorb all modern award monetary entitlements such as minimum wages, overtime rates, penalty rates and loadings that are otherwise separately payable under an award.
How to comply?
The first step is to understand which awards apply to your workplace, including the new changes, and whether employees are currently paid correctly for their work. Secondly, amend employment contracts and adjustments to HR and payroll practices. The new provisions in the modern awards will set the “base line” for the “better off overall test” in determining if an enterprise agreement should be approved by the Fair Work Commission and as such, will need to be considered in the context of bargaining for new enterprise agreements.
Failure to Comply
A failure to comply will mean a breach of a modern award—colloquially referred to by the media as “wage theft”— and will attract civil penalties under the Fair Work Act 2009 (Cth). Contributed By Australian Payroll Association Australian Payroll Association provides support, education, qualifications, consulting and recruitment services for payroll professionals and employers.
It is your responsibility as an employer to make sure all employment contracts are compliant. If you need any assistance please book a call with us today and Stay Accountable!