Annualised salary arrangement

An annualised salary arrangement pays an employee one annual wage that rolls up multiple award entitlements — minimum wages, allowances, overtime, penalty rates, leave loading — instead of calculating each separately every pay. Several awards (hospitality among them) contain annualised wage clauses, each with its own strict conditions.

The conditions that come with it

• Specify what's included: the arrangement must record which award entitlements the salary covers and how it was calculated.
• Set outer limits: a cap on the overtime and penalty hours the salary can absorb in a pay period — hours beyond the limit must be paid separately.
• Keep time records anyway: start times, finish times and unpaid breaks must still be recorded, and acknowledged by the employee each pay period or roster cycle.
• Reconcile every 12 months (and at termination): compare the salary actually paid with what the award would have paid for the hours worked, and pay any shortfall promptly.

Some employers instead use a common-law contract with a set-off clause. That can work, but the salary still has to genuinely cover the award entitlements it claims to — in every pay period, not just on yearly average.

The honest summary

Annualised salaries simplify the payslip, not the obligation. The award maths keeps running underneath — you've just promised to check it once a year instead of every week, and to keep the records that make that check real.

Annualised wage arrangement clauses of the applicable modern award (e.g. HIGA cl 24) under the Fair Work Act 2009 (Cth) — guidance via the Fair Work Ombudsman.

Related terms

• Loaded rate
• Record-keeping obligations
• Hospitality Award (HIGA)