Western Australian Industrial Relations Commission

Contract for salary in lieu of award entitlement must be specific

Industrial Magistrate G Cicchini determined that an employee’s contract of employment did not prevent her from recovering pay for overtime and other entitlements under an award, even though the contract provided an annual salary in lieu of ‘any’ entitlements under ‘an’ award. 

The employee was covered by the Clerks – Private Sector Award 2010, which requires the employer to advise the employee, in writing, which provisions of the Award are ‘satisfied by payment of the annual salary.’  The employer argued that the contract of employment satisfied the Award requirement because it said ‘any’ provision of ‘an’ award is satisfied by the payment of an annual salary. 

His Honour found against the employer, noting that the contract did not specify ‘which of the provisions of’ the Award were satisfied by the annual salary; nor did it say which award was satisfied.  Therefore, the employee’s entitlement to overtime and other award entitlements were not excluded by her annual salary.  His Honour also noted that the contract created confusion by claiming to satisfy ‘any’ entitlements under ‘an’ award because not all award entitlements can be offset by an annual salary, and the contract attempted to do just that. 

His Honour noted that contracts must be clear, as required by clause 17.1(b) of the Award, so that employees can easily determine whether they are better off receiving an annual salary in lieu of the Award. 

The decision can be read here.

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