Have you undertaken your employees’ 12 month annualised salary reconciliation?
Early last year our newsletter advised of new obligations placed on employers in regard to their employees on annualised salaries. This included requirements to notify employees covered by certain awards of how their annualised salary was calculated, to keep additional records and to conduct a 12 month reconciliation.
If you have a full time employee who has been on an annualised salary for 12 months this is a reminder that you will now need to provide the employee, in writing, a record of what was included in their salary and ensure that the calculations are high enough to cover all entitlements.
Employers must undertake a reconciliation of their employees' annual wage if they are covered by one of the following Awards:
Category 1 (employees generally have a pattern of fairly stable hours) includes:
- Banking, Finance and Insurance Award 2020
- Clerks - Private Sector Award 2020
- Contract Call Centres Award 2020
- Hydrocarbons Industry (Upstream) Award 2020
- Legal Services Award 2020
- Mining Industry Award 2020
- Oil Refining and Manufacturing Award 2020 (clerical employees only)
- Salt Industry Award 2020
- Telecommunications Services Award 2020
- Water Industry Award 2020
- Wool Storage, Sampling and Testing Award 2020
Category 2 (employees generally work highly variable hours or significant ordinary hours that attract a penalty rate) includes:
- Broadcasting and Recorded Entertainment Award 2020
- Local Government Industry Award 2020
- Manufacturing and Associated Industries and Occupations Award 2020
- Oil Refining and Manufacturing Award 2020 (non-clerical employees)
- Pharmacy Industry Award 2020
- Rail Industry Award 2020
- Pastoral Award 2020
- Horticultural Award 2020
It is important to still check other awards that cover your business if they are not listed here, as some have annualised salary arrangements that existed before the introduction of this provision.
The Reconciliation
Various entitlements are usually included in an annual salary arrangement, for example; overtime, penalty rates, allowances and leave loading. To reconcile an employee’s salary, you will need to:
- Calculate the remuneration due to the employee, under the provisions of the award, and compare it to the annualised salary actually paid to the employee. This means calculating what entitlements are included in the salary; for example, 4 hours of overtime per week as well as any penalties or loadings.
- This needs to be advised in writing to the employee.
- If there is a shortfall between the two figures, then you have 14 days from the date of calculation to pay the employee the difference.
Please contact the team at Your HRmanager should you require assistance with your annual reconciliation.