How to avoid wage theft with salaried workers – Important Fair Work Award changes in 2020
The Fair Work Commission, following a decision from the Full Bench, has determined that annualised salary clauses are to be inserted into several modern awards with effect from 1st March 2020. These changes introduce important new practices for HR and payroll aimed at reducing “wage theft” and non-compliance with awards.
What does this mean for employers
If any employees are covered by the modern awards listed in the industries/occupations that the new salary clauses will be inserted into, then it is highly likely that their employment contracts will require amendments and adjustments made to both HR and payroll practices.
Will this affect your business
As a result of the Fair Work Commission’s decision to change annualised salary provisions, as of 1 March 2020, employers with staff covered by any of the Awards that are listed below, will have a responsibility to provide:
- Written notice to their employees to notify them of their annual salary and the maximum ordinary hours outside of the 38-hour working week or pay cycle, that are deemed normal additional hours. Also, how the annualised salary has been calculated, including overtime, penalty assumptions, allowances and leave loading etc used in the calculation
- Ensure that your employees don’t earn below minimum wage overall when they work any hours above the 38-hour working week.
- Pay employees for any overtime worked if the hours are additional to those nominated in their salary. If an employer discovers that an employee received less pay on a pay cycle to their annual wage agreement than if they were paid under the award with loadings, it’s your responsibility to pay your employees the difference.
Employers are required by the new clauses to implement payroll and HR practices to ensure:
Awards That Have Changed
- 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
- 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 2010
Think of Woolworths, George Calombaris and their recent discovery of wage underpayments – it is common practice for employers to pay an overall annual remuneration to award covered employees which is intended to “off-set” 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.
Few employers audit these annual salaries on an annual basis to ensure the overall remuneration does in fact compensate employees for each individual award entitlement that falls due.
The new award obligations introduced by the FWC are aimed at ensuring that award covered employees are properly compensated for the work they perform by making sure that their annual remuneration is adequately calculated and monitored in order to capture the full range of monetary benefits applicable under modern awards for the particular work performed.
How can Business 360’s Employer Assist service help your business comply
The first step to ensure compliance is to determine which modern awards apply to your workplace, including the new changes, and whether employees are currently paid correctly for the work they perform.
Secondly, amendments to employment contracts and adjustments to HR and payroll practices are highly likely to be the most practical and efficient way to comply with the obligations imposed with effect from 1 March 2020.
What will happen if you, as an employer, fail to comply
You will breach a modern Award, referred to by the media as “wage theft” and will attract civil penalties under the Fair Work Act 2009 (Cth).
Unsure of how this may affect your business and need more information regarding these important changes?
For a complimentary discussion to answer your questions, call the team at Business 360 on 1300 287 360