Court found an ‘all-inclusive rate’ of pay may include award entitlements if clearly expressed

The employment contract of a former employee did not prevent her from claiming payments for additional hours worked because the contract failed to clearly express which entitlements were included in her annual salary.  

Ms Stewart was employed by Next Residential Pty Ltd (Next Residential) as an administration coordinator with an annual salary of $78,000.

Ms Stewart claimed Next Residential failed to pay her overtime and lunch breaks worked as required by the relevant award, being the Clerks – Private Sector Award 2010 [MA000002]. Next Residential claimed any additional hours worked were on her own volition and were not directed by the company, any additional hours worked were offset by early finishes, late starts and half days, and, as per her contract, she was paid an annual salary, which took into account additional hours worked. Therefore, Next Residential claimed that she was not entitled to further payment for lunch breaks or overtime worked.

The contract stated “Your salary is inclusive of any award provisions/entitlements that may be payable under an award” and “Your remuneration takes [reasonable] additional hours of work in account and no further payment will be made for extra hours worked.”

The Award required the employer to inform the employee which specific provisions of the Award would be satisfied by the annual salary.

Ms Stewart argued her contract of employment did not identify the applicable Award and did not inform her of the Award provisions that were satisfied in the annual salary. Consequently, she claimed she was entitled to overtime hours worked and payment for work completed during her lunch break, amounting to $28,984.

Decision

Employers may pay employees an ‘all-inclusive rate’ that includes award entitlements, so long as this intention is clearly expressed in the contract of employment. However, under the Award relevant to Ms Stewart, not all entitlements may be included within an annualised salary, for example meal breaks.

The Court found the contract created uncertainty and confusion by including “any” award provision under “an” award. The provision lacked specificity and the parties were not alert to the applicable Award or the provisions which were to be included in the annualised salary. Further, the contract appeared to include entitlements in the annualised salary that, under the Award, could not be included.

As a result, the employment contract did not exclude Ms Stewart’s claim because the contract did not clearly indicate which entitlements were included in her annual salary.

As the parties only sought the Court to make a preliminary determination, the Court was not required to make any orders that Next Residential pay Ms Stewart the amounts she claimed she was entitled to.

Read the full decision here

* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate. 

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