On 23 December 2019, a Full Bench of the Fair Work Commission (FWC) handed down their most recent decision[1] (Decision) in the Annualised Wage Arrangements Common Issues matter in the 4 Yearly Review of Modern Awards.  

Managerial Salaries Absorption Provisions (Clause 27.2)
In their Decision the Bench agreed to preserve the existing managerial salary absorption provisions currently contained in Clause 27.2 of the Hospitality Industry (General) Award 2010 (HIGA). This is a significant win for Australian Hotels Association (AHA) Members, ensuring senior management staff under the HIGA can continue to be employed in accordance with these flexible salary provisions.   

With respect to the current managerial salary provisions in the HIGA, the Bench noted in their decision, that:

“… we are not satisfied that they are in fact annualised wage arrangements provisions at all; they may better be characterised as exemption provisions operating in conjunction with minimum wages provisions.”[2]

The preservation of these provisions would not have occurred if it were not for the strong advocacy efforts of the AHA in the FWC.

In an earlier decision[3] in February 2019 in this matter, the Bench had provided the parties with details of a proposed Model Clause that would have replaced the existing Clause 27.2 managerial provisions in the HIGA. The proposed Model Clause was in our view significantly more restrictive than the current managerial salary provisions and administratively would have been more onerous for our Members. Through the submissions and representation of the AHA, we were able to ensure that the Bench did not implement the Model Clause as they had previously proposed and protected the existing managerial provisions so that they remain unchanged.

Annualised Salary Provisions (Clause 27.1)

In the Decision, the Bench have outlined changes that will be made to the existing annualised salary provisions currently contained under Clause 27.1 of the HIGA. Significant changes to the existing annualised salary arrangements will include;

• The Employer needing to undertake an annual reconciliation of the employee’s salary to calculate the amount of remuneration that would have been payable to the employee under the provisions of the HIGA in comparison to the annualised wage actually paid to the employee.
• The setting of an outer limit number of ordinary hours that would otherwise attract the payment of a penalty rate under the award and an outer limit number of hours that would otherwise attract overtime. Additional pay needing to be paid to employees where their hours exceed these outer limits.  

The annualised salary provisions of the Restaurant Industry Award 2010 (RIA) will also be changed.

The FWC have published draft determinations of the proposed changes to the annualised wage arrangements in the HIGA and RIA and parties have until 31 January 2020 to provide any comments on these determinations. A date for when the new annualised wage arrangement provisions take effect will be determined in due course. Members will be advised of when the HIGA and RIA will be varied to ensure that there is sufficient time to transition to the new annualised salary arrangements.

Members will also be provided with further details as to how these changes will affect their existing annualised salary employees as well as the employment of new employees under these arrangements in the future.  

Please click below to download a copy of the decision.