5-Minute HR Challenge: Spot the Compliance Mistake
Annualised wage arrangements can simplify payroll — but they’re one of the most common areas where businesses get caught out. Can you spot the compliance mistake in the below scenario?
The Situation
Sam’s Café employs full-time staff under the Hospitality Industry (General) Award. To make payroll easier, Sam puts employees on a flat annualised salary. Sam assumes:
Timesheets don’t need to be kept because staff are on salary.
The contract of employment (which states the annual salary) is enough to prove compliance.
As long as the salary is above the National Minimum Wage, award conditions don’t apply.
Sam does not check the award to see if annualised wage arrangements are allowed or whether the arrangement complies.
What’s the compliance mistake in Sam’s approach?
Sam has made multiple compliance mistakes:
- No record-keeping → Even under annualised wage arrangements, employers must keep timesheets/rosters, unpaid breaks, and leave records for 7 years.
- Contract ≠ compliance → An annualised wage arrangement must meet award or enterprise agreement conditions, not just be stated in a contract.
- Ignoring the award → Not all awards allow annualised wage arrangements, and employers must check the relevant award before applying one.
Failure to meet these obligations can result in underpayment claims, penalties, and significant legal risk.
Annualised Salaries: Avoiding Common Compliance Traps
Annualised wage arrangements seem simple – but many businesses get caught out by compliance risks. Here’s what every employer needs to know before putting one in place.
What to Watch Out For
- Not every award allows annualised salaries.
- Agreements must be in writing and clear about what’s included.
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Records must be kept – and checked annually.
Where Employers Slip Up
- Not reconciling wages with hours actually worked.
- Failing to keep proper timesheets.
- Assuming contracts automatically override awards.
Watch: The First Step to Getting Annualised Salaries Right
Annualised salaries can be a useful tool – but only if managed correctly. For peace of mind, reach out to our team at [email protected] | 1300 720 004.
