Salary payments

Annual Wage Review – 1 September 2021 changes

From 1 September 2021, minimum wages in the Retail Award are increasing. Updated minimum rates are now available in our pay tools. See our Annual Wage Review 2021 page for more information.

Find out about annual salaries and how they can be arranged.

Annual salary requirements

An annual salary can't be less than the minimum entitlements an employee is entitled to under the award or registered agreement that applies and the National Employment Standards.

The requirements that need to be met when agreeing to an annualised salary can be outlined in an award, employment contract, enterprise agreement or other registered agreement.

An employer and employee can agree that an annual salary covers entitlements like:

  • minimum weekly wages
  • penalties
  • overtime
  • allowances
  • annual leave loading.

Find out the rules in your award about making an annual salary agreement by selecting from the list below.

Horticulture Award

Based on what you've told us, it looks like you're covered by the Horticulture Award [MA000028].

An employer and a full-time employee can agree on an annual wage arrangement. Employers need to make sure their employees annual wage is high enough to cover the award entitlements that they've included in the arrangement, which can include:

  • minimum wages
  • allowances
  • afternoon and night shift penalties
  • public holiday penalties
  • overtime
  • leave loading.

An employee's annual wage can't be less than what they would've been paid over the year if they were paid all of their award entitlements for their work.

An annual wage arrangement may end at any time by written agreement between the employer and employee. Otherwise, anyone can end the arrangement by giving 12 months written notice.

Employers can still pay all employees an annual salary without using annual wage arrangements in an award, as long as it covers all of their minimum entitlements. Employers should consider getting independent advice to make sure they're paying their employees enough.

Record-keeping

Employers need to record the annual wage arrangement in writing and give their employees a copy. This has to include:

  • the annual wage that will be paid
  • which award entitlements are included in the annual wage
  • how the annual wage has been calculated, including any assumptions used in the calculation
  • the maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.

The employer must also record the employee’s:

  • starting and finishing times
  • unpaid breaks taken.

Employees have to acknowledge the record of hours they've worked is correct by signing in writing or electronically at the end of every pay period or roster cycle. This record is used for annual reconciliations.

Use our Annualised wage arrangement template to record the details of your annual wage arrangement.

Overtime and penalty rates

A salary doesn't mean an employee misses out on overtime or penalty rates.

An employee's annual wage will generally include an amount for penalty rates and overtime. However, sometimes the annual wage isn't enough if the employee is working extra hours or at times they don't usually work.

If an employee works more than the ‘outer limit’ of hours in a pay period or roster cycle, they're entitled to be paid at their award overtime or penalty rate.

Annual reconciliations

Employers have to undertake a reconciliation of their employees' annual wages:

  • every 12 months after the arrangement starts
  • when the arrangement ends, or
  • when the employment ends.

Employers have to make sure their employees have been paid at least the same amount they would've been paid under the award if they weren't on an annual wage, for all the hours they worked.

If an employee's annual wage is less than the award payments that they would have received, their employer has to pay them the difference within 14 days.

Check the Horticulture Award for all entitlements for employees who are paid an annual wage.

Resources

We’ve made it easier for you to find information about pay and entitlements under the Horticulture Award. For more tailored information about your award, visit our Horticulture Showcase.

To find out more about who this award applies to, go to the Horticulture Award summary.

Source reference: Horticulture Award [MA000028] clause 17 external-icon.png

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Best practice tip

Check your employment contract for details of any annual salary arrangements.

Records of annual salary arrangements

Salary agreements should be documented in writing, and identify which entitlements are included in the payment.

The employer and the employee should keep a copy of the agreement.

Tools and resources

Related information

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