Annual Salaries

The main agriculture awards now allow for an employee and employer to agree to the employee being paid an annual salary. Often this makes it easier for the employer to run their payroll with the employee being paid the same amount every pay period.

However, the awards also state what must be provided to the employee when offering an annualised salary.

Basically, when working out an annualised salary the employer will look at the employee’s base rate of pay based upon their classification level under the award, how many hours they expect the employee to work including overtime, whether or not they will work on any of the public holidays and take into account annual leave and annual leave loading. If the employee is also entitled to any allowances these should also be taken into account.

A comparison of the award calculation against the annual salary must be provided to the employee in writing.

At the end of the annualised period, that is, every 12 months the employee has been on the salary, the employer must do a form of audit to ensure that the employee has not been paid less than they would have been if they had been paid strictly in accordance with the award. This may arise when the employee works more overtime then expected (e.g., during lambing, calving or harvest) or worked on more public holidays then expected. If the employee has been paid less than they should have been paid under the award, then the shortfall must be paid to the employee. If the employee has been paid more than they would have been paid under the award that is not a problem.

It is important to note that just when an employee is paid a salary the terms and conditions of the relevant award still apply. For example, we often hear that the employee is on a salary and therefore there is no need to pay overtime, annual leave loading, allowances or some other penalty set out in the relevant award. As set out above, if at the end of the year the employee has been paid less than the award prescribed for the work performed, then the employee is owed the shortfall.

Similarly, calling an employee a manager when they have no managerial responsibilities or authority, does not exclude the employee from the correct classification and benefits of the award.

As indicated in a previous newsletter, wage theft is now a crime and if an employer deliberately underpays an employee, for example setting a salary lower than the employee should receive under the award, that would leave the employer open to prosecution.

If you want to look at an annualised salary for your employees contact Andrew at Primary Employers Tasmania for assistance.