New rules to stop underpayment in effect, but payroll staff unprepared

That means salaried employees who are forced to work too many hours of overtime are often underpaid, as investigations by The Age and The Sydney Morning Herald have repeatedly exposed.

The Fair Work Commission has changed 18 awards governing minimum pay and conditions standards in industries including broadcasting, legal services, mining, telecommunications and clerical services to include new safeguards to prevent wage underpayment. Another four awards are under review.

The changes require businesses to make sure salaried employees’ working hours are recorded and then verified, that they are told the maximum amount of overtime they can work before their pay drops below the award and that employers double check they are paying employees on annualised salaries a legal amount at least once a year.

Employees do not have to be covered by annualised salary clauses in awards, even if they are paid on that basis, because the entitlements under those clauses can be bought out with higher wages in contractual “set-off” clauses.

But workplace expert Stephen Smith with employer body Ai Group said it was “very common” for employees in some industries, especially clerical employees, to be employed under the annualised salary rules affected by the Fair Work decision.

There are about 1.7 million clerical and administrative workers in Australia, according to federal jobs data.

Mr Smith said the record keeping requirements imposed under the new rules were “onerous” and went beyond the requirements in the Fair Work act to track employees’ overtime hours.

The Australian Payroll Association’s chief executive Tracy Angwin said she feared the rules would hurt flexible working arrangements and put an unreasonable burden on businesses.

“It’s going to hurt workplace culture, that’s for sure,” Ms Angwin said. She said businesses were taking two courses: some large employers who “don’t want to end up in the newspaper” were hiring consultants or additional senior payroll staff. Others, Ms Angwin said, were “paralysed” and waiting for more clarity about the rules.


Of 250 payroll administrators who responded to a survey conducted by Ms Angwin’s organisation on Monday, 39 per cent said they were prepared, 39 per cent said they were not and 22 per cent were unsure.

Unions though, said the changes were simply a way of ensuring the employers complied with existing law.

“Employers need to stop looking at paying proper rates and conditions as an administrative burden and start respecting it as a basic workplace right,” said Daniel Walton, national secretary of the Australian Workers Union.

“It’s not onerous for employers to reconcile their books every year to ensure employees have not been disadvantaged by an annualised salary.

“This is a bare minimum safeguard when you consider the multibillion dollar problem that is wage theft. An annualised salary is not meant to rip workers off.”

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