Annualised Salaries - A Pending Adminstration Nightmare

Jim Courtwood
Author of the Time & Attendance Consultant's Guides

Many companies are aware ( although many are not) that changes to the Annualised Salary provisions in many awards take effect 1st March 2020.

These changes are to protect employees from underpayment, and they include measures to both improve the transparency of the Annualised Salary Agreement and, more significantly for employers, a requirement to measure actual hours worked.

Here are the changes which most affect employers. These changes may vary between awards to some degree.

  1. Employers must have written documentation which records which provisions of the award that are included within the annual salary agreement. In this documentation the 'outer limits' of the number of overtime or penalty rate hours that are included within the annual salary within the payroll cycle. When an employee works hours which exceed those 'outer limits' in a pay period/roster cycle, pay the employee for those hours worked (at the relevant overtime or penalty rate) within the applicable pay cycle.
  2. Keep records of the start times, finish times and unpaid break times for each employee paid an annual salary, and have employees sign, or acknowledge as accurate, that record in each pay cycle.

  3. Perform an annual 'reconciliation' every 12 months, calculated from the commencement of the annualised salary arrangement or upon on termination of the employee's employment. The yearly reconciliation will involve calculating the amount the employee would have been paid if they were paid on an hourly basis in accordance with the award. If there is any shortfall, it must be paid within 14 days.

 

Clearly, for many companies, measuring and reporting on employee attendance could result in a significant increase in administration costs.  To meet the requirements of these changes, your company may need to compare actual hours to those "outer limit" hours specified within the annualised salary agreement each payroll cycle.


Fortunately, there is a fairly simple solution.

The recording and measuring the attendance of employees against known benchmarks is the domain of Time & Attendance Systems. These systems can electronically capture employee timed using a variety of devices and, the smarter products will be able to produce accurate calculations of the hours worked and report on employees who may be about to exceed their "outer limit" hours well before that actually happens.

A word of caution.

Time & Attendance Systems come in many different forms, and the entry-level ones may look attractive from a pricing standpoint, but they may introduce calculation errors by virtue of their limited flexibility around rounding rules. See this article for more details.


The ideal attendance system will accurately record employee attendance including unpaid breaks and automate the process of reporting on those employees who may be approaching their Outer Limit hours whether that may be on a payroll cycle basis or an annualised basis.

Other useful features would include a self-service portal for employees so they can have easy access to their attendance records. Cloud-based products are generally the best format as they facilitate access through any device and they open up the possibilities for other clocking methods such as GPS located phone apps for those employees who may work away from the office.

Where to from here?

  • If these changes apply to your company, then there are some things you need to have in place.
  • You should consult with your advisors regarding your current award or workplace agreement. It is important to know which changes apply to your company. You may even want to consider reviewing the current agreements where possible.

  • From 1st March 2020 you will need to record attendance and conform to your new reporting requirements.


While you can do all of this manually, it will be much simpler and less costly to invest in a time and attendance system to handle the time recording and produce the required reporting.



Jim Courtwood

Time & Attendance Consultant

1300 553 254

Flexible Time & Attendance Systems

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