From 1 March 2020, new clauses for annualised salaries commence in 21 modern awards. These have broad coverage, including for white-collar industries, such as the Clerks – Private Sector Award 2010, Legal Services Award 2010 and the Banking, Finance and Insurance Industry Award 2010. The commentary in the By Lawyers Employment law guide has been updated accordingly.

An annualised salaries clauses enables an ‘annualised wage arrangement’ to be made in a modern award. Employers can choose to annualise an employee’s wages over a 12 month period. This means they pay a fixed amount in satisfaction of the modern award requirements. The fixed amount includes all entitlements such as weekly pay, allowances, overtime rates, other penalty rates and annual leave loading.

Not all modern awards contain arrangements for annualised salaries. For those that do, an annualised payment clause applies with some variation depending on the industry.

Annualised salary clauses apply only to full-time employees. However they have no effect where a full‑time employee is being paid standard wages and benefits in accordance with the applicable award. They only apply to an ‘annualised wage arrangement’.

The annualised wage must be no less than the amount the employee would have received under the award for the work performed over the year for which the wage is paid.

When making arrangements for annualised salaries under the applicable modern awards, employers are required to comply with requirements for notification, record keeping and wage reconciliation.

See the By Lawyers Employment law guide for more information on the new clauses, the modern awards to which they apply and the employer requirements.

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