2020: Do you pay annualized salaries? You need to know this.

Changes apply to several awards from 1st March 2020.


From 1 March 2020, the obligations of many employers who pay their employees an annual salary under “annualized salary” provisions in modern awards are changing.


"..there will be new obligations on employers paying annual salaries under these provisions."


The Fair Work Commission is introducing changes to the terms of several modern awards which will mean that from 1 March 2020 there will be new obligations on employers paying annual salaries under these provisions. Although these changes will vary slightly from award to award, some of the common changes will require employers to:


  • Have in place written documentation which records which provisions of the award are intended to be included within the annual salary.

  • Specify in this documentation the ‘outer limits’ of the number of overtime or penalty rate hours that are included within the annual salary in each pay period/roster cycle.

  • Where an employee works hours which exceed those ‘outer limits’ in a pay period/roster cycle, pay the employee for those hours worked (at the relevant overtime or penalty rate) within the relevant pay cycle.

  • Keep records of the start times, finish times and unpaid break times for each employee paid an annual salary, and have employees sign, or acknowledge as accurate, that record in each pay cycle.

  • Perform an annual ‘reconciliation’ every 12 months, calculated from the commencement of the annualised salary arrangement or upon on termination of the employee’s employment. The annual reconciliation will involve calculating the amount the employee would have been paid if they were paid on an hourly basis in accordance with the award. If there is any shortfall it must be paid within 14 days.


"Keep records of the start times, finish times and unpaid break times for each employee paid an annual salary, and have employees sign, or acknowledge as accurate, that record in each pay cycle."


The following awards are where employers are able to pay an annual salary without the employee’s agreement.


  • Banking, Finance and Insurance Award 2010

  • Clerks – Private Sector Award 2010

  • Contract Call Centres Award 2010

  • Hydrocarbons Industry (Upstream) Award 2010

  • Legal Services Award 2010

  • Mining Industry Award 2010

  • Oil Refining and Manufacturing Award 2010 (clerical employees only)

  • Salt Industry Award 2010

  • Telecommunications Services Award 2010

  • Water Industry Award 2010

  • Wool Storage, Sampling and Testing Award 2010


The following awards will require the employee to agree for the employer to pay an annual salary.


  • Broadcasting and Recorded Entertainment Award 2010

  • Local Government Industry Award 2010

  • Manufacturing and Associated Industries and Occupations Award 2010

  • Oil Refining and Manufacturing Award 2010 (non-clerical employees)

  • Pharmacy Industry Award 2010

  • Rail Industry Award 2010

  • Horticulture Award

  • Pastoral Award 2010


The following awards where the new requirements will be introduced at a later date (a date after 1 March 2020, which is yet to be determined).


  • Health Professionals Award 2010

  • Marine Towage Award 2010

  • Restaurant Industry Award 2010

  • Hospitality Industry (General) Award 2010


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