Annualised Salaries and Flat Rates of Pay

Sometimes it is easier to agree upon an annualised salary or a flat rate of pay for an employee rather than working out weekly hours and overtime which can vary from week to week.

However, there are a couple of legal requirements in having either of these arrangements in place.

Firstly, if you are looking to have an annualised salary then you must provide a comparison to the award so that the employee can see whether they are better off or not. Secondly, if there is expected overtime then it must set out how much overtime is covered by the salary, and what happens if the employee works more than those expected overtime hours. Thirdly, you must set out what else the salary covers, be it allowances, annual leave loading etc. And finally, it must all be in writing.

Similarly, if you are looking to have a flat rate of pay for all hours worked, that is an over-award payment, you must ensure that it covers what would have been paid pursuant to the award when the employee works overtime, and again, clearly set out what is covered by the flat rate, be it just overtime, or does it also include allowances, annual leave loading, etc.

If it isn’t stated that the over-award payment covers these items they are still payable in addition to the flat rate of pay.

With both of these pay arrangements, as it is with all employees, it is essential that a record of hours is kept so that you can prove that the annualised salary or flat rate of pay, covers what the employee would have been paid if they had been employed purely under the award. With an annualised salary a 12 monthly check is required under the award.

Primary Employers Tasmania can assist in preparing the necessary documents and has spreadsheets that can quickly check the proposed salary against award requirements.