Last updated January 2024
This chapter explains when you can pay an annualised salary, and how to pay them under modern awards and set-off clauses in employment contracts.
What is an annualised salary?
Annualised salaries allow you to pay an employee the same weekly and fortnightly wage regardless of the hours they work in that week or fortnight.
An annualised salary is a type of absorption agreement that allows you to pay an employee a uniform weekly wage in full satisfaction of all award minimum weekly wages, allowances, overtime and penalty rates, and annual leave loading.
An absorption agreement is an agreement under which an employee accepts that the salary or wages an employer pays them includes payment for all monetary entitlements under any applicable modern award or enterprise agreement, including overtime, penalties, loadings and allowances.
By paying an employee an annualised salary, you can pay the employee the same weekly and fortnightly wage regardless of the hours they work in that week or fortnight.