Annualised Salary vs Award Check
You pay a flat salary; the award keeps ticking underneath it. This check prices the hours your salaried employee actually works — penalties, overtime and public holidays included — at verified award rates, and tells you whether the salary still covers it or a backpay debt is quietly building.
Last verified: 19 July 2026An estimate, not your annual reconciliation.
This check prices the working pattern at award rates effective 1 July 2026 (verified 2026-07-19) and deliberately understates the true award cost — flat 150% overtime, no allowances or leave loading. The award's own annualised wage arrangement clause governs what your salary can absorb and what you must reconcile. Staff covered by an enterprise agreement instead? That comparison is the BOOT calculator.
Frequently asked questions
Can I pay a flat annual salary instead of award penalty rates?
Yes — an award-covered employee can be paid an annualised salary that absorbs penalty rates, overtime, allowances and loadings, either under the award's annualised wage arrangement clause or a properly drafted contractual set-off clause. The condition is that the salary must actually cover everything it claims to absorb for the hours really worked, in every pay period the arrangement runs. A salary that covers a quiet Monday-to-Friday pattern can fall short the moment the same employee starts working weekends or regular overtime — under the Hospitality Award, for example, Saturdays cost 125%, Sundays 150% and worked public holidays 225% of the base rate (rates effective 1 July 2026).
What happens if the salary doesn't cover the award?
The gap is an underpayment debt from the first short pay run — not a figure that resets at year end. The employee (or the Fair Work Ombudsman) can recover up to six years of back-pay, plus superannuation on the shortfall and interest, and courts can add civil penalties on top. If the role sits under an award annualised wage clause, the clause itself requires any shortfall found at reconciliation to be back-paid promptly. The fix is straightforward when caught early: back-pay the gap, then either lift the salary, restructure the hours, or move to paying award entitlements line by line.
Is underpaying salaried staff wage theft?
It can be. Since 1 January 2025, intentionally underpaying wages or entitlements is a criminal offence under s.327A of the Fair Work Act 2009, carrying up to 10 years' imprisonment and fines that can reach three times the underpayment. Honest mistakes are not criminalised, and small businesses that follow the Voluntary Small Business Wage Compliance Code are protected from criminal referral — but the civil back-pay debt and penalty exposure remain either way. A salary set years ago and never re-checked against award increases is the classic way an honest arrangement drifts into a large shortfall.
Do I have to reconcile an annualised salary every year?
If the salary is paid under an award's annualised wage arrangement clause — yes. The standard clause (inserted across many awards from 1 March 2020) requires the employer to keep records of start times, finish times and unpaid breaks, compare the salary each 12 months (and at termination) against what the award would have paid for the hours actually worked, and back-pay any shortfall within 14 days. Employers relying on a contractual set-off clause instead are not bound by that exact machinery, but an annual written reconciliation is still the practical proof that the salary keeps covering the award — and the first thing asked for in an audit or dispute.
Is this the same as a BOOT (Better Off Overall Test)?
No. The BOOT is the Fair Work Commission's approval test for enterprise agreements (s.193 Fair Work Act 2009): it compares an EA's whole package against the award. This check answers a different question — whether a flat annual salary paid under the award covers what that award's minimum rates, penalties and overtime would pay for the hours actually worked. No enterprise agreement is involved. If your staff are covered by an EA rather than the award, use the BOOT calculator to compare the agreement's rates instead.
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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.