Changes to the Pastoral Award: Tips for Employers

The Award and the National Employment Standards set out minimum employment terms and conditions between certain employees and employers and, in most cases, cannot be overridden by agreements between the employer and the employee.

On 1 March 2020, new provisions were added to the Pastoral Award to introduce annualised wage agreements.

Employers and full-time employees now have the option to enter into written agreements for the payment of an annualised wage. These agreements are not available to part-time or casual employees.

An annualised wage is a type of salary that factors in award requirements (such as the minimum wage, estimated overtime, allowances and penalty rates) as an alternative to paying an employee on an hourly basis each pay period or roster cycle.

If an employer and employee enter into an annualised wage agreement, it must specify the following:

• the amount of the annualised wage payable to the employee;
• which provisions of the Pastoral Award have been included in the annualised wage (eg whether it includes overtime and allowances for vehicle use, accommodation, rations etc);
• how the annualised wage was calculated; and
• the maximum (or “outer limit”) number of penalty hours and overtime hours employees may be expected to work in a pay period or roster cycle before they are entitled to extra payment on top of their annualised wage.

Our tips

TIP 1

Annualised wage agreements must not disadvantage employees and prevent them from claiming overtime or penalty rates over and above the amounts agreed upon in the wage agreement.

Employers should carefully track and record all employee hours, including accurate recordings of when employees start, finish and take breaks to provide as evidence to an employee if an audit is required.

TIP 2

In some pay periods or roster cycles, employees may exceed the expected outer limits set out in their agreement and the annualised wage will not sufficiently compensate them for the hours they worked.

Employers should adopt a check mechanism as part of payroll practices to ensure that an employee is paid at the Pastoral Award rate for any hours worked in excess of the outer limits expected of them under the agreement.

TIP 3

Every 12 months from the commencement of an annualised wage agreement, or on the termination of employment, employers must calculate the amount which would have been payable to the employee under the Pastoral Award and compare this to the annualised wage.

Employers should diarise the anniversary of each employment and audit the payments made to the employee so that if the amount owed under the award exceeds the annualised wage, the difference must be paid to the employee within 14-days.

TIP 4

Annualised wage agreements are not mandatory and employers and employees do not need to change their existing employment arrangements.

Unless there is a pattern of predictable overtime hours to be worked, private vehicle usage, accommodation or ration provisions, it will be difficult for employers to estimate and provide for the appropriate allowances to employees.

Annualised wage agreements can be onerous in terms of recording requirements, reconciliation reviews and the determination of anticipated overtime and penalty hours. For many employers, the traditional method of paying employees in accordance with the Pastoral Award (or paying an annual salary under a contract with an Award set off) remains the most effective options.

Thynne + Macartney’s Agribusiness group has expertise in dealing with all types of employment agreements and are here to help.