Annualised Salaries – A Decision and Draft New Clause 24
Further to earlier QHA communications, the Fair Work Commission (‘FWC’) has issued its decision on the outstanding matter of annualised wage arrangements in the Hospitality Industry (General) Award 2020 (‘HIGA’).
A copy of the full decision can be found here.
While we are still digesting the decision and what it means for QHA members, please note the following key aspects of it:
By way of background, the FWC had already decided that “Model Clause 4” would be adopted into the HIGA to replace existing clause 24, introducing amongst other things:
- Outer limits (requiring separate payment within a pay cycle once the relevant threshold is met); and
- Prescribed reconciliation requirements.
The outstanding issues were the appropriate quantum of the outer limits, and when the new provisions should be operative from. In this regard, in February 2020 the AHA, our national body, submitted:
- the outer limits should be 12-17 for overtime and 32 for penalty rates (contrasted to the FWC’s provisional view of 16 for penalty rates, and 10 for overtime); and
- a transitional proposal of at least 6 months was necessary to allow for adequate preparation.
The AHA subsequently submitted, in March 2022, that due to the financial impact of COVID, a period of six–12 months was an appropriate transitional period for implementation.
The Decision in Summary
In short, the FWC has decided, in relation to the HIGA, that:
- The outer limit for overtime hours shall be an average 12 per week hours that are in excess of ordinary hours;
- The outer limit for penalty rate hours shall be an average of 18 per week;
- The outer limit for penalty rates hours does not include 7:00 pm to midnight penalties;
- The changes will operate from 1 September 2022.
The above will also apply in the Restaurant Industry Award 2020.
Preliminary Analysis and Take Aways
This decision has favourable elements. The FWC has increased its limits from its provisional view. Furthermore, the exclusion of 7:00 pm – midnight penalty hours presents as a much more palatable and practical option than what it could have been.
However, in regard to the timing of implementation, members have a period of just shy of five months to prepare for the changes.
Notwithstanding, the overall change arising out of this decision will be significant for members who rely on the annualised salary provision for non-managerial staff and will likely have financial implications and require adjustment to payroll systems. Practically, it may be the case that members will seek alternatives to annualised salaries and/or work arounds (e.g. rostering changes).
Clause 25 and Collective/Enterprise Agreements
Members are reminded that HIGA clause 25 will not be changing as part of this annualised salaries common issue.
The proposed changes also do not impact annualisation clauses in existing Collective or Enterprise Agreements.
A draft determination of the new clause has been published, and there is a final round of submissions in relation to any issues due by 21 April 2022. The AHA will continue to represent member interests and provide relevant and necessary feedback during these submissions.
Stay tuned for further QHA communication to confirm when the new clause 24 has been finalised, and for information on how to navigate it. Members are encouraged to wait until the new clause has been finalised before relying on the draft determination.
QHA members seeking more information or wishing to discuss a specific employment relations matter are encouraged to contact the Employment Relations Department for a confidential discussion by calling 07 3221 6999 or emailing firstname.lastname@example.org.