ALERT | Is it time to review your annualised wage arrangements?

On the 1st of March 2020, the Fair Work Commission inserted model clauses relating to annualised wage arrangements into a number of Modern Awards.

A sub-section of the Model Clause provides that:

“The annualised wage must be no less than the amount the employee would have received under this award for the work performed over the year for which the wage is paid”

As this month marks a year since the insertion of the Model Clause, some Employers may be due to conduct an annual reconciliation of their annual wage arrangements against the entitlements provided by their relevant Modern Award.

Companies who facilitate wage reconciliations internally often find the process to be extremely complicated and time consuming.  However, such processes are essential in order to avoid allegations of wage theft. Large corporations such as Woolworths, Target and Qantas have all been subject to underpayment claims in recent years. In particular, Woolworths identified that salaried staff had not been paid as per the minimum required in the General Retail Industry Award. As a result, they had underpaid its employees close to $300 million.  Such cases demonstrate that even companies with sophisticated payroll systems and who are aware of compliance requirements, are susceptible to underpayment of wages.

In 2020, the Fair Work Ombudsmen (‘FWO’) audited 1432 workplaces due to public knowledge reports such as new articles. In doing so, the FWO found a non-compliance rate of 71% with the most common contraventions being underpayments of hourly rates of pays and penalty rates for work on weekends.  Within the Corporate Sector, a number of companies had also self-reported non-compliance to the FWO with more than $90 million due as back payment for 12,000 employees.

The FWO is prioritising compliance in high-risk sectors such as fast food, restaurants and cafés, horticulture, and franchise networks. Mapien has assisted several companies that are considered high-risk with facilitating payroll audits and ensuring compliance. In the past 12 months, audits in a number of industries including hospitality, community services, and mining were conducted. Points of non-compliance were found in nearly all audits completed.

Having a Mapien consultant do a quick payroll check is simple. Reviewing one fortnight or monthly payrun can show if there are any underlying problems and is certainly in your best interests.

If you would like to know more about annualised wage arrangements or if you seek assistance in conducting a wage reconciliation, please contact us and a Mapien Workplace Strategist will be in touch within 24 hours.