Annualised salary reconciliation and award compliance review
Annualised salary clauses in many modern awards since March 2020 require strict record-keeping and annual reconciliation. This checklist is for Australian employment lawyers advising employers that pay salaried staff covered by an award with an annualised wage clause.
This is a 12-step checklist for reviewing annualised salary arrangements — covering the modern award annualised wage clauses, set-off clauses, outer-limit hours, record-keeping, and annual reconciliation against the award under the Fair Work Act 2009.
The checklist
Identify the applicable modern award
Confirm the relevant modern award and whether it contains an annualised wage arrangements clause (e.g. Clerks, Banking, Manufacturing).
Review the annualised wage clause type
Check which of the 4 FWC award model clauses applies — outer-limit, employer-choice, salary set-off, or bespoke.
Check written agreement requirements
Confirm a written annualised wage agreement exists identifying the award provisions satisfied and the method of calculation.
Identify outer-limit hours of work
Record the maximum ordinary hours, maximum overtime hours, and penalty hours that the salary compensates.
Calculate the award minimum for the year
Calculate what the employee would have earned under the award using rostered hours, penalties, and overtime.
Compare salary to award minimum (BOOT-style)
Compare actual salary paid to the calculated award minimum — the salary must exceed the award in every pay period.
Check record-keeping of start, finish, and break times
Confirm the employer has records of start, finish, and unpaid break times signed by the employee each pay period.
Complete the annual reconciliation
Within 12 months of engagement and on termination, reconcile the salary against the award minimum.
Identify any shortfall and back-pay
Pay any shortfall within 14 days of the reconciliation. Document the calculation and the payment.
Review against the new wage theft offence
From 1 January 2025, intentional underpayment is a criminal offence. Confirm governance to avoid the offence.
Review salary set-off clause in the contract
Confirm the contract has a common-law set-off clause for any amounts not covered by the award annualised clause.
Update annual contracts and policies
Update annualised wage agreements each year, publish the method, and train payroll on reconciliation.
When this checklist applies
Use annually for every salaried employee covered by an award with an annualised wage clause, and on every termination.
Common pitfalls
- No written annualised wage agreement identifying award provisions
- Missing start, finish, and break time records
- Not paying the shortfall within 14 days of reconciliation
- Relying on contract set-off when the award clause applies
- Ignoring the new wage theft offence from 1 January 2025
Run this checklist on a real matter
Quillio runs award-minimum calculations, reconciles salaries across a pay cycle, and drafts annualised wage agreements on a live matter. See /practice-areas/employment-lawyers or start a free trial.
General guidance for annualised salary compliance. Adapt for award-free employees, high income earners, and guarantee of annual earnings arrangements.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
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