The Hospitality and Restaurant industries are known for their fast-paced environments with not a moment to spare. Yet, when it comes to payment of staff, it’s important to slow down and ensure that there is compliance with the Award requirements. This is particularly so noting that there have been recent changes to the Award and the restaurants/cafes are deemed priorities in 2023 for compliance and enforcement by the Fair Work Ombudsman.[1]

What’s the difference between the two Awards?

  • The Restaurant Industry Award [MA000119] covers various businesses which sell food and beverages to be eaten on the premises, including restaurants, cafés, night clubs and reception centres.
  • While the Hospitality Industry (general) Award [MA000009] primarily focuses on tourist accommodation (hotels, resorts, caravan parks), wine bars, casinos and hotel restaurant/ facilities. The scope of employees is a lot wider under the Hospitality Award.
  • Note however, that there is a separate Award for Fast Food Outlets and where an employee is covered by an Enterprise Agreement, this will take precedence over the Award.

What are the options when paying staff?

Generally speaking, there are up to three ways in which you can pay hospitality and restaurant staff.

Option 1: Tailored Pay per Cycle

  • Reviewing each employee’s hours worked and rates per payment cycle, resulting in different amounts each pay.
  • Each pay cycle would require an assessment of the timesheet to consider applicable penalty rates, overtime & allowances (e.g. split shift, overnight stay, meals, clothing, laundry, motor vehicle, & travel) for the past work period.

Option 2: Annualised Pay

  • Only for full-time employees.
  • Agreement to pay an annual wage salary that is more than the minimum award entitlements, including: overtime rates, penalty rates, annual leave loading and certain allowances.

Option 3: Loaded Rate Arrangement

  • Only in the Hospitality Award.
  • Payment of a percentage amount above an employee’s ordinary hourly rate (Loaded Rate) in satisfaction of overtime, split shift allowance & penalty rates (except public holiday rates)

What is Annualised Pay?

An Annualised Pay allows for a set salary per year with a regular amount paid to an employee for their work. It is calculated as an amount that is at least 25% more than the minimum wage and prescribed entitlements in the Award. If certain entitlements are excluded from the annualised wage arrangement, they must be paid separately as they arise.

This form of payment can be beneficial for all involved. For the employer, there is less work in actioning payments because the majority of entitlements have already been considered in the initial calculation done to determine the salary. For the employee, there is certainty in obtaining a regular payment per pay cycle.

Changes to the Annualised Pay

As of 1 September 2022, changes to the annualised wage arrangement clauses were introduced in the Hospitality and the Restaurant Award. There are specific rules about the maximum amount of overtime/penalty hours that an employee can work and thus counted in their annualised salary.

In any weekly roster cycle, an annualised wage is restricted to cover:

  • an average of 12 overtime hours (e.g. 2+ hours overtime = 150% of ordinary hourly rate);and
  • an average of 18 ordinary hours that attract a penalty rate, except for evening work between:
    • 7pm and midnight, Monday to Friday – in the Hospitality Award
    • 10pm and midnight, Monday to Friday – in the Restaurant Award; and


Any hours worked in a roster cycle that exceed the overtime or penalty rate hours listed above (known as “the outer limits”) are not covered by the annualised wage and must be separately paid in accordance with the Award.

Other requirements for Annualised Pay

Where a written agreement for an annualised wage arrangement is entered into, the agreement must specify: (i) the annualised wage that is payable; (ii) which of the provisions of this award are included; and (iii) the overtime/penalty rate hours anticipated to be worked. A copy of the agreement must also be given to the employee as well as kept on record by the employer.

Once an annualised wage has been calculated and set, it must be reviewed at the end of each 12 months (or earlier if the arrangement or employment ends) to ensure compliance with the Award. The agreement may be terminated also by: (i) the employer or the employee giving 12 months’ notice or (ii) at any time, by written agreement between the parties.

How can we help you?

We can provide legal services to you to:

  • Confirm which Award, level and payment is applicable to you or your staff;
  • Review your current pay arrangements to determine if the Award is met or that your business is meeting the requirements;
  • Assist with any disputes surrounding entitlements; and
  • Advise on any exceptions that might apply to your circumstances/ staff.

For further information contact our team today on 02 6285 8000 or by email.