How to avoid underpaying your salaried employee’s – Annualised Salary Arrangements

Do you have any staff on an annualised salary arrangement?

If you do – it’s time to dust off the calculator or the Excel formulas and recalculate whether the annual salary you’re paying your salaried staff still:

HR Tactics HR Consultant Brisbane - How to avoid underpaying your salaried employee's – Annualised Salary Arrangements

1. accurately reflects the employee’s usual working hours and

2. they’re being paid at least the amount that they would have received under the award.

The reason it’s time to do it now is that March is the anniversary of when the new annualised wage provisions came in to being back on March 1st, 2020 and one of two new clauses were added to some modern awards.

2 things you must do now

1. Check for any salary provisions in the modern award that applies to those you employ on an annualised salary arrangement.

2. Recalculate what their annualised salary should be.

  • If it’s lower than the amount that would have been paid under the Modern Award if they weren’t on a salary, then you’ll need to calculate how much backpay is payable to them.
  • If it is at least equal to or above the amount that would have been paid under the Modern Award if they weren’t on a salary then you are all good.

3 things to do when putting an employee on an annualised salary

Where an annualised wage is paid, you the employer must: 

1. Advise the employee in writing of: 

  • the annualised wage payment to them.
  • which clauses in the Modern Award are being satisfied by their annualised wage.
  • make sure you specify an ‘outer limit’ of the hours that would attract penalties or overtime, which the employee may be required to work over a pay period or roster cycle for the annualised wage.
  • you need to specify the separate payments that will be made to the employee for any additional hours worked outside of the ‘outer limit’ within the pay period or roster cycle.

2. Put a recurring reminder in your diary/calendar to conduct an annual reconciliation each 12 months from the commencement of the employee’s annualised wage arrangement.

3. Keep detailed records of the employee’s actual start and finish times (including any unpaid breaks) and requiring employees to sign off, or acknowledge, that the record of hours is correct for that pay period or roster cycle.

Reach out to us at HR Tactics if you have any queries regarding any of the above. We’re here to help

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This information was provided with the intention of helping you find more clarity, confidence and peace of mind as you navigate your own journey as an employer. I would love to hear your thoughts on this, and if you think someone else would enjoy it please feel free to share it on.


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About The Author
Jackie Strachan

Jackie Strachan

Jackie’s passion for creating better Human Resources outcomes stems from over 20 years’ experience in the field and a drive for finding innovative solutions.
Her HR career has seen her hold both operational and strategic HR management roles across a vast array of industry sectors including retail, financial services, child protection, professional services, dental, state emergency services, Department of Justice, agency recruitment and IT.
Combining her experience in each specialised area of Human Resources (such as learning & development, recruitment, WHS and employee relations etc), Jackie leads HR Tactics with an industry-respected foundation of knowledge.