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October 22, 2020 on chapter Individual flexibility agreements

Above-award salaries

Awards stipulate that flexibility agreements should not be provided to employees until after they have commenced employment. However, committing to above-award salaries in advance is often necessary to attract certain candidates. Is there a best-practice strategy for handling this scenario?

Generally, if the employee’s salary is above the high-income threshold ($153,600 from 1 July 2020), the employer and employee can enter into a guarantee of earnings. This precludes application of the modern award in totality. Alternatively, the employer and employee can enter into a set-off agreement, which states that the above-award salary compensates the employee for specific monetary entitlements. The employee cannot be worse off under this arrangement, i.e. they must receive at least the minimums that they would receive under the award.

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