26 September 2022
As a reminder, the final group of awards will see their Annual wage increase apply from the first full pay period after 1st October 2022. The affected awards include:
If your business operates under one of the above awards, a copy of the award can be found here: https://www.fairwork.gov.au/employment-conditions/awards/list-of-awards
Annualised salary arrangements in restaurant and hospitality awards changed at the start of September 2022. Upon reviewing these Awards and looking into the practicality of managing them, based on industry knowledge the Fair Work Commission has introduced changes that will make payments for salaried workers fairer.
Previously Employers have been able to pay 25% on top of the base wage to allow for overtime and penalties. This meant they could do an annual reconciliation of actual hours worked to ensure the salary covered the overtime and penalties there were entitled to had they been paid by the hour. Then depending on the result any shortfall in wages could be paid with a single top-up payment each year. Any benefit to the Employee was then considered a win to them.
The new arrangements bring in weekly outer limits to overtime and penalty hours. Employees who work more than 18 hours on weekends and public holidays within a week will need to be paid the hourly or penalty rate in addition to the regular wage.
If you’re paying staff an annual salary, the new rules mean you will need to review hours each week to check staff are not working more than the prescribed outer limits for extra hours. If they are, you will need to calculate the amount owing and pay it each week. While an annual reconciliation of hours worked against the wages paid is still required, you can no longer wait until the end of the year to calculate and pay any shortfall. This is the biggest change that you’ll need to action.
The new system should make it fairer for salaried employees who will receive payment in the week that extra hours over the limits were worked. It should also assist with your business’s cash flow, as you’ll be paying wages during busy times, and the annual top-up payment should be smaller.
If you’re paying staff a salary, there are certain obligations you have to meet. Write the terms and conditions of an Annualised Salary into a contract. We can help draft this for you. However, if you have not implemented this or if you need to update your current contracts, we can also help in this area. The cost of getting it wrong is too high—can you afford not to be compliant?
