18 May HR LAW MID-MONTH UPDATE: MAY 2022
NEW ANNUAL WAGE ARRANGEMENTS
There are new annual wage arrangements in the Health Professionals and Support Services Award 2020 (“Health Services Award”) and Marine Towage Award 2020 (“Marine Towage Award”).
Under the Health Services Award, full-time employees can agree to be paid an annual wage instead of a weekly or hourly pay rate if they are classified either as a Support Services Level 8 or 9 or as a Health Professional levels 2 to 4. Under the Health Services Award, the annual wage can compensate for minimum award wages, allowances, overtime, penalty and shift rates for a limited number of hours, as well as leave loading.
The Marine Towage Award provides that all full-time employees can agree to be paid under an annual wage arrangement if:
- the employee’s annual wage is at least 40% more than the award minimum weekly wage for their classification multiplied by 52; and
- it cannot be less than what the employee would have been paid annually if the employee was paid all of their Marine Towage Award entitlements for their work performed, such as minimum wages, overtime and penally rates (for a limited number of hours) and public holidays.
There are certain requirements that must be met to make a valid annual wage arrangement. For example, the Health Services Award (similar to the Marina Towage Award) requires the annual wage arrangement to be in writing and sets out the annual wage that will be paid, the award entitlements included in the wage and the maximum (“outer limit”) penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment. The Health Services Award also requires setting out how the annual wage has been calculated (including any assumptions used in calculations). An employer must give the employee a copy of the written annual arrangement.
An annual wage does not mean an employee is not paid overtime or penalty rates. If an employee works for more than their agreed maximum (or “outer limit”) overtime or penalty hours in a pay period or roster cycle, the employee will need to be paid for the extra hours at the applicable overtime or penalty rate in the award.
An employer needs to record the employee’s start and finish times and unpaid breaks. The record of hours needs to be signed by the employee (either personally or electronically) at the end of each pay period or roster cycle. This record is kept and used for annual reconciliations. Reconciliation of the employees’ annual wages needs to be undertaken by the employer every 12 months after the arrangement starts or when the arrangement or employment ends. If the amount actually paid to the employee is less than the award payments that the employee would have been paid under the award, their employer has to pay them the difference within 14 days.
An annual wage arrangement can end at any time by the employee and the employer agreeing in writing that the arrangement is ending or by the party ending the annual wage arrangement giving the other party 12 months written notice that the salary is ending.
These arrangements can be made from the first full pay period on or after 9 May 2022.
Annualised wage arrangements are already contained in most modern awards including the Clerks – Private Sector Award 2010, the Manufacturing and Associated Industries and Occupations Award 2020 and the Hospitality Industry (General) Award 2020.
If you require advice regarding annual wage arrangements, please contact the team at HR Law.
If you are interested in reading further, you can access the Fair Work Commission determinations regarding the changes to the Health Services and Marine Towing Awards here:
Health Services Award:
Marine Towing Award:
CASE CONFIRMS CASUAL EMPLOYMENT CANNOT BE ENDED WHENEVER A PARTY WISHES
Judge Vasta has been held to have incorrectly ruled in Jess v Cooloola Milk Pty Ltd [2021] FCCA 1526 (7 July 2021) that, “under casual employment arrangements, there is an ability for an employer or an employee to simply end the employment arrangement whenever either wishes to do so”.
Judge Vasta made this ruling in the context of finding that, “cessation of casual employment is not adverse action” agreeing with the Respondents “that the exclusion given pursuant to s342(3) of the FW Act fits these circumstances”.
This exclusion states that adverse action does not include action that is authorised by or under the Fair Work Act 2009 (Cth) (“FW Act”) or any other law of the Commonwealth or a law of a State or Territory prescribed by the regulations.
Upon appeal in Jess v Cooloola Milk Pty Ltd [2022] FCAFC 75 (10 May 2022) Justice McElwaine observed that Judge Vasta, “did not otherwise expose his reasoning process”.
The Respondents conceded that Judge Vasta had erred in his interpretation of the FW Act. Justice McElwaine confirmed this concession was rightly made finding that:
“There is nothing in the text, context or purpose of the provision that supports the interpretation of [Judge Vasta]”.
“The text of s342 of the FWA is plain – it applies to the dismissal of employees without limitation as to the character of the employment as permanent, fixed term or casual”.
“This is confirmed by the definition of ‘dismissed’ at ss12 and 386 of the FWA by which a person is dismissed if their employment is terminated ‘on the employer’s initiative‘.”
If you require termination advice, HR Law are here to assist.
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