STP And Annualised Salary Reporting

Where an employee is paid annualised salary an employer should consider whether to pay the amount as a lump sum gross payment or disaggregate components.

Disaggregate components

If annualised salaries have identifiable components and set out on employment contracts eg how much overtime employees are to be paid ( not just covering a reasonable amount of overtime ) than employers are required to report the disaggregated components ( gross, overtime and allowance ). Other examples of this is if employer conducts a bottoms up calculation or pulls apart the annualised salary to workout the overtime and determine if OTE is payable. Where an all purpose allowance employers should consider how they derived the amount usually can be split into different tasks in which case each task is identifiable should be separately itemised for STP reporting purposes

Gross Payment

If when determining the annual salary the employer covers all entitlements and decides to pay based on above award payments referring to market rates than effectively they only need to report the one single gross amount through STP reporting. This could be a combination of a guesstimate and market value and includes determining the outer limits to meet reporting requirement of award. In the event the employee does happen to work over the outer limits than this would be paid as overtime and as such reported as overtime for STP purposes. 

In a nutshell it’s all about how the annualised salaries amount is derived on the employment contract, when components broken down / split on the employment contract then disaggregate amounts are reported for STP reporting purposes and when not they can remain to be reported as on single gross amount.

Annualised salary award obligations

STP reporting requirements for annualised salaries would not negate the employers responsibilities in meeting Fairwork requirements as retrospectively employers must still meet their annualised salary award obligations :

• ensure employees covered by the affected modern awards are advised in writing of (or agree to) their annualised salary and the calculations that have been used to come up with that salary amount and outer limits;

• ensure employee records are accurate and up to date and that time attendance records of start and finish times and unpaid breaks are kept and countersigned by the employee;

• ensure employees who work in excess of the ‘outer limits’ compensated for in their salary are paid for any excess hours in each pay period or roster cycle; and

• conduct regular reviews and reconciliations (at least once every 12 months from the start of the arrangement) of an employee’s annualised salary against the award provisions, to ensure that there is no shortfall. Regular reconciliations (e.g. monthly) may be compiled to complete the required annual reconciliation.