New rules for annual salaries in food service industries
Updated: Sep 11, 2020
You opened a restaurant because you are passionate about bringing people together over great food and drink... not so you could chase time sheets. But not knowing your legal HR obligations can land you in the kind of trouble that can destroy your business and reputation. While some people are getting it right, we’re sure that a whole lot of business owners are definitely just guessing. We also know that very few people are trying to take advantage of employees – most people are just trying to make their business work in an insanely competitive market.
2020 has been quite a sh*t-show so far, so you might have missed a pretty critical change that Fair Work introduced in March about how you pay employees on a salary.
Whether you have employment contracts or not, you still need to follow the Fair Work Award that covers your business. So, if you are covered by the Restaurant Industry Award or the Hospital Industry Award, and you are paying anyone a salary, here are the changes you need to know about:
Both Awards now have (slightly different) rules which spell out what you need to do if you want to pay someone an annual salary instead of base-rates, overtime and penalties. These include:
Your employee needs to agree to an annual salary – and not under coercion or duress.
Annualised salaries only cover penalties and overtime – you still need to pay allowances and things like Annual Leave Loading (you can offset these with an agreement though).
The minimum pay per week must be 125% higher than the minimum Award rate (for waitstaff in either Award, this is $989.13 per week – and that is waitstaff who have just finished intro training, not experienced employees).
You need to calculate (yearly or when they leave) what you would have paid if they were getting base + penalties + overtime, and if it is more, you have to back-pay the difference.
Your employees must have at least 8 days off each month.
If they work a public holiday, you have to give them a paid day off ‘in lieu’ or an extra day of annual leave.
You need to keep a record of start and finishing times (a time sheet) which they need to sign to say is true.
The rules above are a little different for hotel managerial staff.
What this all means is that even though you decided to pay an annual salary to simplify things, you still need to track hours (and prove it) and you still need to calculate Award rates.
Despite the distraction of COVID-19, Fair Work are still focusing heavily on auditing and reprimanding food and beverage service industries, and they are making you prove that you are doing things the right way.
If you need help setting up your HR processes to meet these changes, or you think your contracts might need a bit of love, we are here for exactly this reason. Flick us a Facebook message, email email@example.com or head over to the contact form on our home page to start the conversation.