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The Fair Work Commission (FWC) recently conducted its Four Yearly Review of Modern Awards (Review), with a focus on annualised wage arrangements. The Review involved an assessment of annualised wage arrangements under the Health Professionals and Support Services Award 2020 (Health Professionals Award), and the “outer limit” number for penalty rates and overtime under the Hospitality Industry (General) Award 2020 (Hospitality Award), Restaurant Industry Award 2020 (Restaurant Award) and the Marine Towage Award 2020 (Marine Award).

health professionals award

In the Review, the FWC decided that annualised wage arrangements should not apply to Health Professionals at a level 1 classification but should be made available to level 2 and 3 classifications.

The FWC stated that more junior employees may not have sufficient experience or a proper understanding of usual working hours to give informed consent to annualised wage arrangements. Further, employees at this level generally have little bargaining power, which can make them vulnerable to exploitation by their employers.

However, the FWC decided that level 2 and 3 employees have sufficient experience to enable them to properly assess whether annualised salary proposals are fair in relation to their regular hours worked.

The operational date for this variation is 9 May 2022.

hospitality award and restaurant award

The FWC determined that where there is a pay uplift of 25%, the outer limits where extra payments will be incurred by employees are:

  • an average of 18 hours over the pay period/roster for penalty rate hours; and
  • an average of 12 hours over the pay period/roster for overtime hours.

The FWC noted that outer limits were designed to ensure wage arrangements were not exploited, and are intended to protect employees from working “unsociable” or an extreme number of additional hours without being correctly renumerated.

The FWC highlighted that the hospitality and restaurant industries do a large majority of their work during “unsociable” hours. Therefore, the penalty rate limit would be used up very quickly by employees, and employers would struggle to roster employees. To accommodate this, the operation of the penalty rates hours outer limits is excluded between 7:00pm and midnight for the Hospitality Award and 10:00pm and midnight for the Restaurant Award.

The operational date for this variation is 1 September 2022.

marine award

The FWC decided that where there is a pay uplift of 40%, the outer limits where extra payments will be incurred by employees are:

  • an average of 20 hours over the pay period/roster for penalty rate hours; and
  • an average of 15 hours over the pay period/roster for overtime hours.

The operational date for this variation is 9 May 2022.

what does this mean for employers?

It is imperative that employers are aware of whether their employees are covered by the Health Professionals, Hospitality, Restaurant or Marine Awards. If so, employers should ensure the provisions in their employment agreements surrounding annualised salaries are in line with the FWC Review by the relevant deadlines. If not, employers could fall foul of their obligations under the Award.

If you would like to know more about your changing obligations under the relevant modern awards, please contact the Employment Safety and Migration team at Macpherson Kelley who ca

stay up to date with our news & insights

fair work commission addresses annualised wage arrangements in review

12 May 2022
laura croce

The Fair Work Commission (FWC) recently conducted its Four Yearly Review of Modern Awards (Review), with a focus on annualised wage arrangements. The Review involved an assessment of annualised wage arrangements under the Health Professionals and Support Services Award 2020 (Health Professionals Award), and the “outer limit” number for penalty rates and overtime under the Hospitality Industry (General) Award 2020 (Hospitality Award), Restaurant Industry Award 2020 (Restaurant Award) and the Marine Towage Award 2020 (Marine Award).

health professionals award

In the Review, the FWC decided that annualised wage arrangements should not apply to Health Professionals at a level 1 classification but should be made available to level 2 and 3 classifications.

The FWC stated that more junior employees may not have sufficient experience or a proper understanding of usual working hours to give informed consent to annualised wage arrangements. Further, employees at this level generally have little bargaining power, which can make them vulnerable to exploitation by their employers.

However, the FWC decided that level 2 and 3 employees have sufficient experience to enable them to properly assess whether annualised salary proposals are fair in relation to their regular hours worked.

The operational date for this variation is 9 May 2022.

hospitality award and restaurant award

The FWC determined that where there is a pay uplift of 25%, the outer limits where extra payments will be incurred by employees are:

  • an average of 18 hours over the pay period/roster for penalty rate hours; and
  • an average of 12 hours over the pay period/roster for overtime hours.

The FWC noted that outer limits were designed to ensure wage arrangements were not exploited, and are intended to protect employees from working “unsociable” or an extreme number of additional hours without being correctly renumerated.

The FWC highlighted that the hospitality and restaurant industries do a large majority of their work during “unsociable” hours. Therefore, the penalty rate limit would be used up very quickly by employees, and employers would struggle to roster employees. To accommodate this, the operation of the penalty rates hours outer limits is excluded between 7:00pm and midnight for the Hospitality Award and 10:00pm and midnight for the Restaurant Award.

The operational date for this variation is 1 September 2022.

marine award

The FWC decided that where there is a pay uplift of 40%, the outer limits where extra payments will be incurred by employees are:

  • an average of 20 hours over the pay period/roster for penalty rate hours; and
  • an average of 15 hours over the pay period/roster for overtime hours.

The operational date for this variation is 9 May 2022.

what does this mean for employers?

It is imperative that employers are aware of whether their employees are covered by the Health Professionals, Hospitality, Restaurant or Marine Awards. If so, employers should ensure the provisions in their employment agreements surrounding annualised salaries are in line with the FWC Review by the relevant deadlines. If not, employers could fall foul of their obligations under the Award.

If you would like to know more about your changing obligations under the relevant modern awards, please contact the Employment Safety and Migration team at Macpherson Kelley who ca