Protect your business from future employee wages claims!
Salaried Employees – conditions need checking each year against the Award.
You may be aware that Award pay rates increased by 3.3% effective the first pay period on or after 1st July.
This is a timely reminder to review your Salaried or Annualised Wages.
Did you know that agreeing on an above award salary amount is not necessarily legal and you could be exposed to an expensive back-pay claim through the Fair Work Australia? Protect your business from employee wages claims and ensure compliance.
In most awards, you can only legally ‘buy out’ the following terms:
- When work is performed;
- Penalty rates;
- Overtime Rates;
- Allowances; and
- Leave loading.(check the conditions in your Award)
‘Buying out’ of these terms is only permitted if you can prove the employee is “Better Off Overall”. This means their salary is more than what the employee would have earnt if they were on ‘Wages’ and were paid all the applicable loadings, penalties, overtime etc.
A Salary is not a magic genie cure all that can exclude you from the applicable Award conditions.
It is also a myth that Managers and Supervisors are exempt from the Award.
A position or job title doesn’t make an employee Award exempt, it is being paid above the ‘high income threshold’ that allows an exemption.
Employees earning a ‘high income threshold’ salary which is now $142,000 per annum (@ 1st July 2017, this rate increases annually) are exempt from any associated Award and conditions. There are also conditions in the Fair Work Act, National Employment Standards that apply.
What do you need to do to ensure your Salaried employees are compliant under the conditions of the Award and Fair Work Act?
- Prepare individual spreadsheets of award equivalent Wages calculations for the hours and times including penalties, loadings and overtime for each salaried employee.
- Each year, when award movements are announced (end of June) run the new minimum award rates in each person’s spreadsheet – check the award rate doesn’t exceed the salary rate.
- Check the working conditions of the employee are the same (ie. applicable penalties & loadings) and amend if work patterns have varied over time.
- If the award has caught-up to the salary rate, increase the salary to ensure you are compliant.
- Keep transparent records of these calculations in each employee’s Personnel File.
- Make a calendar reminder to do this review at the end of the financial year.
Do I need to increase the pay of my Salaried employees each year?
- If you have stated you will in the Letter of Offer/ employment agreement – then you need to keep this commitment (until you change your employment agreement);
- If you haven’t made a commitment, then you do not – that is, not until the Award rates meet or exceed the Salary.
- HOWEVER – you may choose to keep the employee’s salary up to date with the CPI movements – this can have a positive impact on employee morale.
If you would like assistance in understanding Salaries and Annualised Wages, and ensure your protection against employee wages claims, please contact Solutions for Human Resources (phone: 0429 410 991 or Hellen@Solutions4HR.com.au)