New annualised salary clauses come into effect

“New annualised salary clauses have come into effect across Australia impacting the payrolls of many Australian businesses,” Innes Willox, the Chief Executive of the national employer association Ai Group, said today.

“However, it is important for employers to realise that the new annualised salary clauses in awards that apply from 1 March do not affect all employees, or even most employees. They do not affect employees who are not covered by an award, such as most managers and professional employees, and they do not affect employees who are covered under an award that does not contain an annualised salary clause. Only about 20 of the 122 industry and occupational awards contain annualised salary clauses.

“For most businesses the biggest impact will be for clerical employees. For employers that choose to pay their clerical and administrative employees under the annualised salary clause in the Clerks Award, onerous record-keeping and pay reconciliation obligations apply from 1 March. These award obligations are more onerous than the pay record and pay slip requirements that are in the Fair Work Regulations 2009.

“Many employers and employees are abandoning the use of the annualised salary clauses in awards as a result of the Fair Work Commission’s decision. There are other options that employers and employees are able to use to retain the existing flexibility that is important to each of them, including use of common law ‘set-off’ clauses in written employment contracts and the use of Individual Flexibility Agreements (IFA) under the Flexibility Clause that is in every award.

“Attorney-General Christian Porter has flagged that the Federal Government may soon release a discussion paper on award flexibility. This should be widely welcomed. Australia’s award system remains far too complex and some major steps need to be taken through legislative changes to ensure that flexibility is retained. Australia is the only country in the world that has an award system and, as a result, we have the most complex set of minimum conditions in the world,” Mr Willox said.

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