Annualised Salaries – what you need to know

From 1 October 2022 Minimum wage increases apply to the below industries.

If you have employees on annualised salaries or increased hourly rates then you need to make sure that you are still satisfying the terms within the award – this means you may have to increase the rate of pay. Find out more about annualised salaries below




#awardwage #fairworkaus #freshhrinsights #HRsupport #annualisedsalarycompliance

payrol compliance

Annualised Salaries – what you need to know

An annual salary can’t be less than the minimum entitlements an employee is entitled to under the award or registered agreement that applies and the National Employment Standards.

What can be included in the annual wage arrangement?

Depending on the award, annual wages arrangements can include entitlements such as:

  • minimum wages
  • allowances
  • overtime and penalty rates
  • leave loading.

Employers need to make sure their employees’ annual wage is high enough to cover the award entitlements that they’ve included in the arrangement.

An employee’s annual wage can’t be less than what they would’ve been paid over the year if they were paid all of their award entitlements for their work.

The awards also have rules about:

  • which classifications can be paid an annual wage
  • what entitlements can be included in the annual wage
  • whether the employer and the employee need to agree to the arrangement.

As each award is slightly different, it’s important that you read the annual wage arrangement clause in your award.

What records do I need?

Employers need to record the annual wage arrangement in writing and give their employees a copy. This has to include:

  • the annual wage that will be paid
  • which award entitlements are included in the annual wage
  • how the annual wage has been calculated, including any assumptions used in the calculation
  • the maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.

The employer must also record the employees:

  • starting and finishing times
  • unpaid breaks taken.

Employees have to acknowledge the record of hours they’ve worked is correct by signing in writing or electronically at the end of every pay period or roster cycle. This record is used for annual reconciliations.

 When do the annual reconciliations happen?

Employers have to undertake a reconciliation of their employees’ annual wages:

  • every 12 months after the arrangement starts
  • when the arrangement ends, or
  • when the employment ends.

Employers have to make sure their employees have been paid at least the same amount they would’ve been paid under the award if they weren’t on an annual wage, for all the hours they worked.

If an employee’s annual wage is less than the award payments that they would have received, their employer has to pay them the difference within 14 days.

If you need assistance understanding your obligations with annualised salaries or require an audit to be done, please get in touch. We are experts in this area – FIND OUT MORE

Payrol compliance