How does the recent 3.75% FWC increase apply to over Award/EA and/or all-inclusive salaries?

It depends on the employment contract/EA. For this reason, every individual might have a different outcome – so check your contracts!

Methods of providing over Award/ EA and/or all-inclusive salaries

The usual methods are:

1. Annualised Wage Arrangements

   – strict compliance with the applicable Award conditions is required which includes a formal time keeping and annual reconciliation process;

2. Individual Flexibility Arrangements

   – strict compliance with the applicable Award conditions is required. Can include non-financial considerations but doesn’t expressly require a formal time keeping and annual reconciliation process (although still recommended);

3. EA arrangements

   – EA clauses have satisfied the BOOT and the applicable base rate in the EA is not less the applicable base rate in the award as amended; and

4. Common Law Contracts

   – providing remuneration or benefits that exceed the employee's minimum entitlements with express terms that specifically identifies and allows the excess amount(s) to be set off against the employer's liability to pay the minimum entitlement(s) (eg the excess is for overtime or penalty rates).

Must Apply the Increase

The FWC increase will generally only apply to above award or all-inclusive salaries if:

• there are express terms promising to do so (eg remuneration plus applicable FWC increase each year or similar); and/or

• the Employee’s base rate of pay falls below the applicable minimum (also known as a s.206 breach). That is, the base rate of pay payable must not be less than the base rate of pay that would have been payable to the employee under the applicable Award or National Minimum Wage.

Discretion to Apply the Increase

There is no requirement to increase existing above award salaries:

• if there are no express terms requiring the FWC increase to be passed on; and

• the Employee’s base rate of pay remains above the new applicable minimum comparable Award or National Minimum Wage

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