Issue 6 2022 - Strict new annual wages clause in health award from May

Updated: Jun 28


Employers whose health professionals or support service staff are not covered by enterprise agreements will need to review their pay practices, time keeping records and employment contracts this month. The Fair Work Commission has new, stringent conditions for the use of annualised wages for a broader range of classifications in the Health Professionals and Support Services Award 2020. EMA Consulting will host a live webinar to explain the requirements in detail.

 

What has happened?

In 2020, the Fair Work Commission varied several modern awards containing annualised wage provisions. They imposed significantly more stringent obligations on employers to ensure and document that employees who are paid an annualised salary are not disadvantaged compared to what they would otherwise receive under the award. A range of new compliance obligations included requirements to:

  • advise employees in writing how the annualised salary has been calculated, and identify each separate component of the annualised wage that relates to any overtime, penalty and allowance assumptions used;

  • specify the maximum number of overtime hours which they may be required to work in a pay period or roster cycle without receiving any excess payment above the annualised salary; and

  • conduct an annual reconciliation against the relevant modern award and back pay any shortfall.

The Commission also decided to add the Health Professionals and Support Services Award 2020 to the list of awards containing such clauses. It allowed further submissions on which categories of employee should be captured. Last week, after two years of debate, it issued its final decision on that point, and published a draft determination. Affected employers are urged to read this.


Full time employees in the classifications of Support Services employees at Level 8 or Level 9, or Health Professional employees at Level 2, Level 3 or Level 4 may enter into a written agreement to be paid an annualised wage in satisfaction of specified award monetary entitlements. This requires mutual agreement, not simply an employer election.


What must be done and by when?
  • If paying an annualised wages or “salaries” in the relevant classifications, you will need to make a new annualised wages agreement and the employee has the election of whether to accept it.

  • The agreement must identify which award entitlements are accounted for and the assumptions behind that.

  • A maximum number of overtime hours in a roster cycle must be specified, and an employee paid overtime if that is ever exceed in a pay cycle.

  • Letters of offer for new employees in those classifications must be revised for compliance.

  • The employer must keep records of the above, as well as records of the employee’s start/finish times and unpaid breaks, which must be signed by employees each pay period or roster cycle.

  • Employers using “salaries” for other than full-time employees should seek expert assistance to determine whether their arrangements are compliant.

These changes commence from the first pay period on or after 9 May 2022. Failure to properly engage with these requirements for affected employees will be a breach of the award and may therefore be subject to pecuniary penalties.


Employers act now to allow enough time for consultation and implementation of the significant changes required to all individual employment contracts, payroll processes, timekeeping, and records.


Where can you get help?

EMA Consulting will be holding a free networking session for clients seeking further information about these changes. Detail about the networking session and how to register will be sent out separately for anyone interested.


We also have a management guide for awards containing annual wage provisions, which includes instructions, examples, and templates. Our employment contract templates also have appropriate documents for making efficient, effective, and compliant employment offers to employees where an annualised wage is proposed.


Require further information/assistance?

If you require further information or advice, please contact your Consultant.


 

EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.

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