Speaking recently on The Lawyers Weekly Show, Amber Sharp – who is a partner at Bartier Perry Lawyers – talked about some of these new changes that have been brought in the implications for employers and then, of course, for employees with their salaries.

“Once upon a time, the utilisation of annualised salaries in one word was a pretty straightforward affair. Reasonable checks and balances were in place and compliance was reasonable and practical,” Ms Sharp said.

“In terms of the new annualised salary provisions, there are a couple of issues. Number one, the terms of the clause have been significantly changed and amended and extended. The second thing to note is the annualised salary clause has been inserted into a much greater number of awards.”

“What an annualised salary permits the employer to do is effectively balance out the ebbs and flows, so as long as on an annual basis the employee is better off or has met minimum obligations, that’s fine.”

“In terms of how that is being used in the past, it’s effectively been a set and forget, and then annually you just check that everything’s fine. In terms of the new obligations, they’re to fall. One is in relation to notification obligations, they seize the whole list of things you now have to inform employees about, and it’s not straightforward.

The driver of these new requirements coming into place has been the scandal concerning the so-called wage theft, according to Ms Sharp.

“That’s obviously been a hot-button issue over the course of the last couple of years, and I suspect that the driver has been to try to implement provisions that will allow employees to have more transparency over how they have been paid,” she said.

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“So I can understand that there are concerns about addressing underpayment. I’m not convinced that this is a sensible or even proportionate response to the issue that it’s seeking to address.”

According to Ms Sharp, there are too many issues with the recent provisions to take any positives.

“I would observe that there does seem to be an uplift of, at least publicity around on the payment claims, so clearly there is an issue,” she said.

“The question is what is causing that problem and how do you address it? For example, is one cause of that problem that modern awards are far too complicated to interpret in the first instance? Is that what the problem is?

“The next question is, is this really the solution given that it creates further complications in relation to how businesses can read, understand and interpret this particular provision?”

There will also be comparative impacts between BigLaw firms and boutique firms with the provisions effectively having two new requirements, according to Ms Sharp. 

“One relates to what you actually have to inform the employee in relation to the annualised salary which is now, it’s going to be called an annualised wage,” Ms Sharp said.

“The other is the way that time of record-keeping obligations are going to be required to be kept.

“What will be required is that the employer must keep a record of the starting and finishing times of work and any unpaid breaks taken of each employee, subject to an annualised wage arrangement for the purposes of undertaking the comparison, identified above. This record must be signed by the employee or acknowledged as correct in writing, including by electronic means by the employee each pay period or roster cycle.”

This would also raise further questions.

“Who’s doing that? Who is going to prepare that document, who’s going to monitor compliance with that document?” Ms Sharp said on how firms may record their employees.

“To what extent is the employer going to be in a position to access whether what is recorded on that document, if presented by the employee, is accurate.”

“So as far as what concerns many law firms, I expect that what they will do is move away from engaging the provision under the award at all, and simply apply common law contract set off courses, which creates the ability to pay a rolled-up salary, which sets the level to compensate for all hours worked and any amounts that are paid in addition to what employees are entitled to, and then they offset against any alleged underpayment.”

To listen to the full conversation with Amber Sharp, click below: