Is the leap year resulting in underpayment?
The national minimum wage for an adult non-casual employee is $882.80 per week, calculated on the basis of a week of 38 ordinary hours, or $23.23 per hour. Awards and enterprise agreements will stipulate higher base rates of pay for ordinary hours of work for the employees they cover.
The question is: Will a salary calculated by the month, week, fortnight or year result in underpayment in a leap year such as 2024?
There is potential for this underpayment if you are converting the weekly wage provided in an award or enterprise agreement to an annualised salary. A multiplier of 52 won’t cut it. The correct multiplier is 52.18, i.e. 365 days + 365 days + 365 days + 366 days = 1,461 days divided by 7 (days per week) = 208.7 weeks divided by 4 years = 52.18 weeks per year.
Be careful also when converting an annual salary prescribed in an award or enterprise agreement into a fortnightly salary because 26 fortnights equate to 364 days in a non-leap year. If an 11-year period includes 3 leap years, the next year will contain 27 pay fortnights. The 12-year period will contain 313 pay fortnights. Therefore, the conversion should be 313/12 x annual salary.
Awards will usually contain rules about payment of annualised salaries to a full-time employee. These usually require the annualised salary to be no less than the amount the employee would have received under the award for the work performed over the year for which the salary is paid.
However, the reality is that most annualised salary packages incorporate a buffer over and above the statutory minimum. If the employer has contracted with employees on the basis that the salary pays all minimum pay entitlements, then the statutory minimum wage payable on 29 February is absorbed by that buffer.
Employees paid by the hour, such as part-timers and casuals, will need to receive the statutory minimum rate of pay for all hours worked. So, a part-timer working every Thursday will get an extra day’s pay in 2024.
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