3 must-know award wages changes for franchisees

By Nick Hall | 26 Feb 2020 View comments

In light of recent reports, it would seem more and more Aussies are falling victim to wage theft. And while there’s no excuse for poor bookkeeping, the common line is that modern award wages are far too complex and confusing for business owners to understand.

What’s more, ongoing reviews from the industry watchdog have seen the regulations surrounding award wages hard to nail down. It’s a frustrating process that few business owners get right, but unfortunately, things aren’t likely to get easier.

The Fair Work Ombudsman’s new annualised salary provisions, set to come into effect on 1 March, bring with them a host of new changes aimed at reducing wage theft.

Employers under 22 modern awards will soon be required to be much more stringent about overtime and record-keeping measures. So, what are the award wages changes franchisees need to know?

1. Mandatory written notification

Under the terms of the new annualised salary provisions, employers and small business operators must now provide written notification regarding specific contractual obligations.

For instances, employers will need to notify employees in writing of their annualised salary and their maximum ordinary working hours outside of the 38-hour week.

2. More stringent record keeping

Further, the incoming award wages changes will also see employers legally obligated to keep track of the start, finish and break times of their employees.

While adding a significant amount of paperwork to the mix, some industry experts are suggesting the changes will also drive a wedge between the two parties.

Tracy Angwin, CEO of the Australian Payroll Association said the written notification will formalise the agreements between employers and employees, which could have wide-spread cultural implications.

“Up until now, employers have been able to rely on a system of trust with their employees,” she said.

“The new annualised salary clauses in some modern awards, which will require more stringent record-keeping and overtime control measures, such as recording the start, finish and break times of employees, will completely change that. In fact, it could erode the trust between employers and their staff.”

While the written notification will soon be legally enforceable, employers should focus on building a strong level of trust with employees. Be open and transparent about why the formalisation is necessary, and always be respectful of circumstance.

3. 14-day reconciliation period

The final award wages change that is set to come into effect in March is the introduction of a reconciliation process.

According to the Fair Work Ombudsman, if an employer finds that their employee received less pay on their annualised wage agreement than if they were paid under the award, they need to pay the employee the difference. Any shortfalls must be paid to them within 14 days.

Angwin said the mandatory payback, while employee focused, had the potential to critically damage small businesses that identify payroll discrepancies across a number of employees.

“Payroll is one of the most complex and legislated areas of a business, but increasingly we’re finding that legislators are creating laws without properly thinking about how employers are going to implement them,” she said.

“The 1 March changes – and their propensity to create a ‘clock-watching’ mentality among staff – is another example of this. Clearly a common-sense approach is needed here to ensure that the intent of the legislation is in fact going to benefit each workplace environment on a practical level.”

Award wages

The Fair Work Ombudsman’s incoming regulatory changes have been designed to reduce wage theft, improving employee conditions.

For franchisees and small business owners, having a firm grasp on the existing legislation is critical. Be sure to consult a payroll expert or visit a franchise accountant if you are unsure.

Compliance is key, and maintaining best practice is essential in franchising.