From 1 September 2022, there will be new annualised salary arrangement rules in the Hospitality Industry (General) Award 2020 and Restaurant Industry Award 2020.
The new rules will replace the previous provisions found in these awards.
Under these annual wage arrangement provisions, an employer needs to pay their employee at least 25% higher than the employee’s minimum weekly award wage for their classification under the award, multiplied by 52.
Here is a breakdown for each award:
| Hospitality Industry (General) Award 2020 – What can be included in an annualised salary arrangement? Under the Hospitality Award, an annualised wage arrangement can include payment for: minimum award rates for the employee’s classification levelallowancesovertimepenalty ratesannual leave loadingadditional public holiday arrangements in clause 35.3. When an annualised wage arrangement covers payment for these entitlements, there is generally no need to calculate and pay for those entitlements in each individual pay period. What about outer limits? In any roster cycle, an annual wage can only cover an employee working up to a weekly average of: 18 penalty rate hours (excluding time worked between 7.00pm and midnight, Monday to Friday)12 overtime hours These are called the ‘outer limits’. Sometimes an employee will work more than the ‘outer limit’ in a roster cycle. If this happens, an employer needs to pay an employee for these extra hours at the employee’s minimum hourly rate plus any penalty or overtime rate on top of their regular wage for that pay period. Any other entitlements not covered by the annual wage must also be paid separately. NB: These changes only apply to full-time employees covered by the Hospitality Award and do not apply to people employed as Managerial Staff (Hotels) under the Hospitality Award. |
| Restaurant Industry Award 2020 – What can be included in an annualised salary arrangement? Under the Restaurant Award, an annualised wage arrangement can include payment for: minimum award rates for the employee’s classification levelsplit shift allowanceovertimepenalty ratesannual leave loading When an annualised wage arrangement includes payment for these entitlements, there is generally no need to calculate and pay for those entitlements in each individual pay period. What about outer limits? In any roster cycle, an annual wage can only cover an employee working up to a weekly average of: 18 penalty rate hours (excluding time worked between 10.00pm and midnight, Monday to Friday)12 overtime hours These are called the ‘outer limits’. Sometimes an employee will work more than these hours over a roster cycle. These extra hours aren’t covered by the annual wage. Instead, an employer needs to pay these extra hours at the employee’s minimum hourly rate, plus any penalty or overtime rate on top of their regular wage for that pay period. Any other entitlements not covered by the annual wage must also be paid separately. |
The Fairwork Ombudsman have created a guide to help employers that want to pay employees an annualised wage under theses awards.
To download this guide please visit:
An employer’s guide to annualised wage arrangements in the hospitality and restaurant industries
To view the final determinations for each award please visit:
Hospitality Industry (General) Award 2020 – Final Determination
Restaurant Industry Award 2020 – Final Determination
Note: The new rules affect full-time employees who are paid an annual wage under one of the above awards. Part-time and casual employees can’t have annual wage arrangements under these awards.
| As a reminder – Keep records! Even though the amount you pay your employees on an annualised wage arrangement doesn’t change each week (unless they work beyond the outer limits or you pay them for entitlements not covered by the annualised wage), you must record their hours. These records are required and will help you when you need to reconcile your employee’s annualised wage at the end of each 12 month period (to compare it to what they would otherwise have received under the award). You have to keep a record of: your employee’s start and finish times each dayany unpaid breaks they took. Your employee has to sign or acknowledge these records as correct in writing each pay period or roster cycle. This can be done electronically. |