Calculating minimum annual salaries can be a complicated process for employees covered by modern awards.
Why is this important?
If employers wish to pay an “all in” salary to cover all entitlements that might arise, it is important the salary is set at a level that is sufficient to meet all relevant entitlements or underpayments can arise. For award-covered employees, the first step is to work out the employee’s base rate of pay based on their classification under the award, then work out how many hours the employee will work over the year.
Employers will also need to factor in payment for any overtime worked (overtime is usually payable when an employee works over their contractually agreed hours, when they work over 38 hours per week and when they work in excess of any daily limits set by the award. Awards also have a “span of hours” outside of which, work is classified as overtime – e.g. work late at night).
Employers will also need to consider any allowances paid to the employee (e.g. meal allowances when working overtime, laundry allowances if they have to clean their own uniforms, tool allowances, etc).
There is also a requirement under most if not all awards to pay an “annual leave loading” when an employee takes annual leave (i.e. a higher rate of pay when an employee is on annual leave, usually set at 17.5%).
Is there a simpler way to calculate an employees minimum base pay?
To make the process easier we have created a Free Annual Salary Calculator which will do much of the hard work for you. Download yours below:
Some awards contain special rules regarding paying annual salaries in “annualised wage” clauses. If you need guidance on the different options for paying annual salaries and the effect of the annualised wage clauses in your award please see our previous articles.
For awards that include an Annualised Wage Clause, we’ve also pre-populated the pay rates for every level under the award into the calculator. The full list of awards is below.
List of awards with an annualised wage clause
- Banking, Finance and Insurance Award;
- Broadcasting Award;
- Clerks Award;
- Contract Call Centres Award;
- Hydrocarbons Industry (Upstream) Award;
- Legal Award;
- Local Government Award;
- Manufacturing Award;
- Mining Award;
- Oil Refining and Manufacturing Award;
- Pharmacy Award;
- Rail Award;
- Salt Award;
- Telecommunications Award;
- Water Award;
- Wool Award.
Need further help?
If you need any further help regarding understanding your rights and obligations when paying an annual salary, please contact us.
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Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.