A recent Federal Court decision has overturned long-standing practices many employers rely on when paying staff on annual salaries.

The ruling makes it clear that it’s not enough for an employee to be better off overall across the year – each weekly, fortnightly, or monthly pay cycle must individually satisfy Award entitlements. Employers also face stricter requirements around overtime and penalty records, with clock-in systems alone not meeting Fair Work Act standards.

What employers need to know:

• Salaries must cover Award entitlements in every pay cycle.

• Above-Award “buffer” payments in quiet periods can’t be used to offset busier periods.

• Accurate records of overtime and penalty hours are essential.

This shift increases the risk of non-compliance across all industries. TCCI’s Workplace Relations team can support you in reviewing employment contracts, salary structures, and record-keeping systems. We can also assist with payroll audits to ensure your arrangements are fully compliant and reduce the risk of underpayment claims.