On 1 March 2020, the Fair Work Commission introduced new annualised salary provisions into various Modern Awards.
These changes are accessible through the various Modern Awards, but the Fair Work Commission doesn’t make it easy to understand.
More often than not, the Modern Awards are filled with legal jargon, making it difficult for businesses to understand whether they’re compliant with the Fair Work rules and regulations.
And, with the Fair Work Commission clamping down on Australia’s growing underpayment crisis, it’s more important now than ever that companies understand what’s expected of their annualised salary obligations.
Regarding regulating annualised salaries, one of the most significant concerns was that some businesses weren’t ensuring that their employee’s annual salary was high enough to cover all the entitlements.
It can be a nightmare for employers to go from not keeping a record of time and attendance for annualised salary staff to suddenly needing to check paper timesheets against their annualised salary arrangement accurately.
So, to accurately keep records without the hassle and ensure your compliance with the annualised salary changes, you may want to consider adopting an automated time and attendance solution.
In this article, we’ll explore how NoahFace time and attendance software, coupled with cloud payroll, can help you stay on top of the annualised salary changes.
What Are The New Rules For Annualised Salary Arrangements?
An annualised salary arrangement is when an employer agrees to pay their employee an annual salary that includes all entitlements in the relevant Modern Award.
An annualised salary should cover the following entitlements:
- minimum wages;
- overtime rates;
- penalty rates; and
- annual leave loading.
If you want to know more about how an annualised salary arrangement works, make sure to check out our practical guide to navigating annualised salaries.
Changes To Annualised Salary Rules
According to the Fair Work Commission, Australia’s growing underpayment crisis had raised concerns about the reliability of these annualised salary arrangements.
When looking into the arrangements, the biggest cause for concern was that some employers weren’t ensuring that their staff’s annual salary was high enough to cover all the entitlements.
So, essentially, the annualised salary arrangement was placing employees at a disadvantage.
To remedy this, Fair Work introduced various processes that employers must follow to ensure that their annualised salary arrangement doesn’t disadvantage their employees.
Because the changes were targeted at employers in industries where the employees are vulnerable and more likely to be disadvantaged, the provisions were introduced in some Modern Awards and not others.
Each Modern Award will specify precisely what is required of the employer, but in general, employers are expected to follow the following new provisions:
- Advising employees of their annualised salary arrangement: employers must notify their employees, in writing, of the total annualised salary amount that will be paid, which entitlements have been included in the amount, and how the total has been calculated.
- Ensuring that the amount is equivalent to entitlements amount: employers must ensure that the total annualised salary amount is the same (in other words, not less than) as the amount the employee would have received if they were a wage and individual entitlements the relevant Modern Award.
- Conducting a 12-month audit: after every 12 months (or on termination of employment), employers are required to the total paid annualised salary amount with the amount that the employee would have received under the Modern Award. If there’s a shortfall (the employee received too little pay), the employer must pay the employee within 14 days. (If the employee resigns or their employment is terminated before conducting the 12-month, the audit must be completed earlier.)
Fair Work will also be requiring businesses to maintain these records for at least seven years.
What Is NoahFace Automated Time and Attendance Software?
When it sees a face, it compares it with known faces within its facial database. If there’s a match, it will acknowledge and register attendance onto NoahFace’s server.
So, whenever your employees start or complete their work, they simply present themselves to NoahFace, which will automatically recognise them through its facial recognition technology. A photo record is always taken with each access attempt for you to review later if you need.
Alternatively, NoahFace can be run on each employee's iPhone or Android phone. So, if they’re completing a job off-site, they simply open the NoahFace Go App, enter their job number (or scan a barcode) to record their activities.
The records can also flow directly into your payroll system, ensuring staff get an annualised salary complete with all their entitlements.
The benefit? A convenient way to accurately record work hours and stay compliant with the annualised salary changes.
How NoahFace Can Help with Annualised Salary Staff
And suppose you’re not capturing this data correctly. In that case, you risk underpaying your employees, which essentially leads to non-compliance with SCHADS Award regulations.
The following case study will show you how NoahFace can help you pay allowances to your employees accurately and efficiently.
Case Study: NoahFace with Annualised Salaried Staff
Neither of these staff members typically kept records of their time and attendance.
So, when the new annualised salary arrangements kicked in, in March 2020, they had no choice but to revert to keeping paper time sheets until they found a better solution.
Law Firm X’s pay cycle runs fortnightly, so every two weeks, they were having to manually check the paper timesheets against each employee’s annualised salary arrangements.
It became incredibly time consuming, and with more and more staff working from home due to the worldwide coronavirus pandemic, they approached us at PayCat to help them with a solution.
They had already set up an automated cloud payroll system; they just needed a solution to capture the start and finishing times of their shift and automatically sync it to that payroll system.
Within a week, Law Firm X employees were clocking in and out using the NoahFace mounted Ipad.
Through the facial recognition system, Law Firm X avoided a significant amount of risk of spreading COVID-19 by eliminating fingerprint scanners and paper timesheets while simultaneously identifying risky individuals using NoahFace’s Thermal Reader.
The Thermal Reader is NoahFace’s temperature screening solution, which automatically recorded staff’s temperatures and notified the relevant stakeholders if staff members had elevated temperatures.
Once employees started working from their home office during the lockdown, staff used the NoahFace Go app on their cellphones to sign in and out and track their tasks.
So, even with Law Firm X’s annualised salary staff working from home, the time and attendance records were automatically synced with their cloud payroll, and employers were able to review each employee's actual hours against their required hours each fortnightly pay cycle.
By implementing NoahFace, Law Firm X has created an indisputable and accessible audit trail to comply with the annualised salary changes
The measures were introduced to ensure that annualised salary staff weren’t at a disadvantage.
Employers are now required to review time and attendance records every 12 months to ensure that an employee’s annual salary isn’t less than what they would've been paid over the year if they were paid all the award entitlements for their job.
While Law Firm X already had an automated payroll system in place that could calculate the annualised salary each pay cycle, they weren’t able to track what the annualised salary amount would have been in terms of the entitlements under the Legal Services Award.
By minimising the burden of keeping a paper trail, they were able to have their staff’s time and attendance records straight to their cloud payroll system, all while minimising the spread of COVID-19 through NoahFace’s no touch clocking system and temperature screening solution.
And the best part?
Nothing was interrupted when employees started working from home because they could continue tracking time and attendance through NoahFace Go - their mobile time and attendance solution. If you’re interested in learning more about NoahFace and/or moving from a manual payroll system to an automated cloud payroll system, get in touch with us today for a free demo.