Annual Salary Reviews – Are You Completing Your 12-Month Reconciliation?

One important obligation that employers can overlook is the requirement to review certain annualised wage arrangements every 12 months.

Under awards such as the Clerks – Private Sector Award 2020, employers using the award's annualised wage provisions must complete a reconciliation every 12 months from the date the arrangement commenced, or when employment ends if earlier.

This involves comparing:

• The total annualised wage actually paid to the employee.

• What the employee would have earned under the applicable award based on their actual hours worked.

• Any applicable overtime, penalty rates, allowances and other entitlements covered by the arrangement.
  

If the employee has received less than their award entitlements, the employer must pay the shortfall within 14 days of completing the reconciliation.

For example, if an employee commenced an annualised wage arrangement on 1 November 2025, their first 12-month reconciliation would fall due on 1 November 2026.

Importantly, the review is based on the anniversary of the annualised wage arrangement, which may not be the employee's original employment commencement date.

Not all contractual salary arrangements are subject to this specific annual reconciliation requirement. However, employers must still ensure their employees receive their lawful entitlements.

Our tip: Set annual reminders for salary reconciliations and review arrangements whenever award rates, employee classifications or working patterns change.

Accurate timesheets throughout the year make these reviews significantly easier and help businesses identify potential underpayments before they become costly problems.