For most of my readers whose family businesses are in the Building & Construction industry, the new mutterings of annualised salaries are not relevant to you, but not all of my readers operate under the Building & Construction award. Even if it is not impacting you now, it may impact you in the future if this regime continues.
So, what is the talk of annualised salaries all about? In my opinion (and this is just my opinion) it is an over reaction to a small number of employers who do the wrong thing which is now putting unnecessary compliance burdens on the many employers who do the right thing. Let me explain this to you in my favourite way; as a story.
There once was a girl who finished high school with a result high enough to be able to go to university and study commerce. It was the early nineties and the height of the excess economy. Those in the finance industry worked hard and played hard. We would wear our shoulder pads with pride while we attended long alcohol fuelled lunches. It was fun, fast paced, exciting and we were paid good salaries. Underpinning all of this – we worked damn hard. 12 hour days were not uncommon, neither was working on weekends. We understood the amazing opportunities that were ahead of us so we put in the long hours necessary to get the job done, to impress our superiors and to earn our bonus or promotion.
Of course this story was about me, and I know I am going to sound like one of those old people who thinks that things were much better in their day. I understand that just because it was acceptable once, does not mean it is always acceptable (think child labour). However, I am a little dumbfounded at these new rules that have stemmed from the high end legal, banking and accounting firms and the graduates who have complained about the hours they are expected to work.
There have been stories in the papers of these graduates working out that the salaries they are paid, compared to the hours they work puts them on an hourly rate below that of someone packing shelves at a supermarket. The culture in these high-end firms encourages long work hours. Watch any American legal drama (Suits, The Good Wife, Billions) and you will see that the traditional hours of 9-5 are never adhered to in these sought after jobs. The long term upside once you have done your time as a graduate is much greater than that of someone who is packing shelves at a supermarket.
I know there are arguments on both sides of the equation. It is not fair for firms to expect their staff work excessive hours. These firms do need to change their culture and not exploit their staff. However, is it really necessary to change the regulations for so many employers to counteract the activities of a few?
If you haven’t already worked it out, I am rather cranky about this compliance burden that we need to explain to our clients, and implement in our own firm. The new rules have come with little explanation and do not address many of the issues that impact the way our workforce operates. There are no provisions for how we treat flexible working hours, working from home and access to work resources outside of the office (many staff are freely able to access emails from their phone as an example).
The new rules for those who operate under the awards impacted started from 1 March 2020. Below are the records you need to keep if you are an employer with full time staff under the relevant awards. These words are taken directly from the Fair Work website.
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.
Essentially, we need to make sure that the effective hourly rate is not below the award rate. Overtime will need to be paid if hours exceed the outer limits. This is to encourage more acceptable work hours and adequate break times.
What awards do these new rules apply to?
It will also apply to the awards below at a date to be determined.
If this is applicable to your business I suggest you check out the information on the Fair Work website at the following link. https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/new-rules-for-annualised-wage-arrangements
I also suggest you seek some help from an advisor if you are unsure. Another cost to small businesses that we need to bear when on the whole, most of us are doing things correctly in the first place.