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News Bulletin : ADA News Bulletin July 2011
28 July 2011 Annualised salaries An annualised salary is an arrangement under which employees take home a pre-determined and generally consistent weekly portion of a fixed annual salary which has been calculated by projecting existing weekly wage rates, penalty and overtime payments if applicable and monetary allowances set out in the modern award or in an enterprise agreement. AdvAnTAGES Of AnnUALISEd SALARIES • Avoids the administrative hassle of calculating allowances and other payments each week; • Provides flexibility in regards to working hours and arrangements, and should eliminate unnecessary overtime; • Superannuation benefits in regards to ordinary time earnings; • An incentive for employees to work throughout the normal span of hours; and • For employers and employees, an annualised salary provides predictability in weekly wage calculations. PROvISIOnS fOR AnnUALISEd SALARIES Some modern awards contain a clause that provides for annualised salary arrangements. However, the Health Professionals and Support Services Award 2010 does not contain a clause relating to annualised salaries. Despite the absence of annualised salaries provision, an employer may decide to pay an over award payment as an annual salary which can be created by an Individual Flexibility Agreement (IFA) under Clause 7 ‘Award Flexibility’ in the Health Professionals and Support Services Award 2010, this clause is seen in most modern awards. InTROdUCInG An AnnUALISEd SALARY ARRAnGEMEnT When introducing an annualised salary it is important for the employer to separately identify each component of the annual salary, which may include weekly minimum wage, overtime, annual leave loading, allowances, and penalties, otherwise it may be regarded as the employees ordinary rate of pay for the purposes of leave entitlements. In such an arrangement the employer must express in writing the annual salary that is payable and a breakdown of the components included. The ADA HR Advisory Service provides template contract of employment which can assist in creating Individual Flexibility Agreements (IFA). The introduction to an annualised salary should not disadvantage the employee and must be no less than the amount the employee would have received under the award for work performed in the year period. It is recommended that the salary is reviewed annually by the employer to ensure that the conditions for remuneration are appropriate under the relevant award as well as taking into effect any annual wage increases. AnnUAL WAGE REvIEW UPdATE Each financial year a Minimum Wage Panel in Fair Work Australia (FWA) is responsible for reviewing and setting the minimum wages for employees in the national workplace relations systems. The panel reviews the national minimum wage order, modern award minimum wages, some transitional instruments and wage orders for award and/or agreement free employees under the Fair Work Act 2009, before making the decision. The next wage decision soon to be released will take effect from the first full pay period on or after 1 July 2011. The HR Advisory Service will update the wage sheets including any increase which will be available from 1 July 2011. Please contact the HR Advisory service for a copy of the updated wage sheets from this date. For more information or assistance, please contact the friendly team at the ADA HR Advisory Service on: Phone: 1300 ADA INC (1300 232 462) Fax: 02 8448 3299 Email: email@example.com The ADA HR Advisory Service is available from 8.30 am–5.30 pm (AEST) Monday to Friday. ‘The answer could be just a phone call away’
ADA News Bulletin June 2011
ADA News Bulletin August 2011