Annualised Salaries - changes to the Clerks Award

25 February 2020

Changes to the Clerks Award insert new rules about annual salaries, with changes coming into effect from the first full pay period on or after 1 March 2020.

The ACA advises all members to familiarise themselves with the new obligations, and ensure that their practice’s systems accommodate the new requirements.

The changes are an outcome of the Fair Work Commission decision about annualised wage arrangements (also known as annual salaries). This affects a range of awards; the one most relevant to architectural practices is the Clerks Award.

The key changes insert more detail into clause 17 Annualised Salaries. These support the existing requirement that employees on annual salaries are not worse off than they would be under the Clerks Award and the National Employment Standards. The additions require further documentation and regular checks to ensure that this obligation is met.

An annualised wage arrangement is an overall annual salary. The total salary includes the monetary entitlements included in the Award and the National Employment Standards – for example, base wages, overtime rates, penalty rates and loadings. Any entitlements not inclued in the salary must be paid separately. 

What are the changes?

There are three main changes under clause 17. See the Award for the full text of the changes.

Notifying employees in writing and record keeping

The documentation required in clause 17.1 (b) has increased.

Where an annualised wage is paid, the employer must advise the employee in writing, and keep a record of:

  • the annualised wage
  • the provisions of the award that are satisfied by payment of the annualised wage
  • the method of calculating the annualised wage, including each component and any overtime or penalty assumptions used in the calculation
  • the outer limit number of ordinary hours that would attract the payment of a penalty rate under the award, and the outer limit number of overtime hours that the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised wage. 
Remuneration calculation

Employers are now required to undertake a remuneration calculation every 12 months, or upon termination, to ensure that the employee is better off overall than they would be under the award. If the calculation reveals that the employee has been underpaid, the shortfall must be paid within 14 days. 

Recording hours

Clause 17.2 (c) is a new addition, which requires employers to keep a record of starting and finishing times, including unpaid breaks, for salaried employees. This must be signed by the employee every pay cycle.

What do you need to do?

Make sure you understand the changes and your obligations as an employer.

  • Check that all employees under the Clerks Award are being paid correctly. If your checks reveal a discrepancy between the salary and what they would be paid under the award for the work performed, ensure that this is addressed by 1 March. Remember, the annual salary must cover all entitlements that are payable under the Clerks Award, including minimum wages, overtime rates, penalty rates and loadings. 
  • Ensure that your practice’s payroll and management systems can accommodate the new requirements, including documenting hours worked by those on salaries.
  • Establish a system to ensure the remuneration calculations are undertaken as required, and the information gained is acted on. 
  • Make sure your employees understand the new requirements to document their hours, and sign off on this. Make sure you have a system in place to facilitate this. 

Failing to comply with these new requirements from 1 March 2020 is a breach of the award and can be penalised under the Fair Work Act 2009 (Cth).  

Further information 

Fair Work Ombudsman – Salary Payments – an overview of salary payments, including information about the changes

Fair Work Commission Decision [2019] FWCFB 4368 – the full decision handed down in July 2019