The IR Geek on Annualised Salaries After Woolworths & Coles: Not Dead—Just Finally Honest

Welcome to another IR Geek instalment. This one had to happen—my feed is drowning in “compliance-only” hot takes on annualised salaries post Woolworths/Coles. Love the enthusiasm, but there’s more than one lawful path. IR exists to manage risk first, then mitigate through compliance—not compliance for compliance’s sake. Let’s cut through the noise and lay out the real choices (and trade-offs) for employers.

HR and Compliance

Let’s say the quiet part out loud: a lot of our HR colleagues (and we love them) are pushing “maximum compliance” as the only path after Woolworths/Coles. It’s well-intentioned—but there’s another, equally lawful option. This is where IR earns its keep. We manage risk first, then mitigate through compliance—not compliance for compliance’s sake.

On 5 September 2025, the Federal Court killed off the “annual wash-up” mindset. The new reality is simple: meet Award entitlements in each pay period—no averaging beteween priods, no retro set-offs. That doesn’t outlaw annualised salaries; it forces a choice about how much risk you’ll carry and how much compliance work you’ll do.

What Actually Happened (and Why It Matters)

• The cases: Woolworths/Coles proceedings confirmed that “all-in” salaries can’t mop up shortfalls from earlier or later cycles.
• The fallout: remediation risk rocketed because weak records and annual averaging don’t survive court.

IR Geek take: Annualised salaries are still viable—they’re just performance-tested every pay period now.

The Mechanics You Must Respect

• Set-off is pay-period bound. Salary only offsets entitlements that accrue in the same period.
• Records rule. Start/finish, breaks, approvals, classification—clean and consistent.
• Payslip transparency. Top-ups land that pay run, itemised.
• Regulator alignment. Expect the per-period standard to be enforced.

Pick Your Poison: Risk Appetite vs Compliance Workload

Model A: Compliance-Heavy, Low-Risk (Pay-Period True-Up)

• Operate: Salary + shadow Award calc each cycle → automatic top-up that period.
• Best for: variable rosters, frequent penalties/PHs.
• Upside: lowest legal risk; issues found fast.
• Downside: admin load (award engine, reconciliations, exceptions). IR Geek: If you can measure it, you can defend it.

Model B: “Set & (Mostly) Forget” (Maxed Annualised Salary)

• Operate: Pay a salary built to cover plausible maximums; run light-touch checks for spikes.
• Best for: stable rosters; rare penalties.
• Upside: simple and steady.
• Downside: likely overpay; still must catch extreme events (e.g., surprise OT, PH shifts, higher duties). IR Geek: You’re buying insurance with a higher salary—not a pass on checks.

Quick Pick Matrix

• Rosters volatile? → Model A
• Rosters stable? → Model B
• Mixed workforce? → Hybrid (A for volatile, B for steady)

Implementation—High-Level (What to Lock In Either Way)

• Contracts:
• Systems & controls: digital time capture (start/finish + breaks), award engine to price per period, auto top-ups before payroll close, alerts for outer-limit breaches/missed breaks/unapproved OT, and quarterly assurance to leadership.
• “Extreme event” checklist before payroll close: unexpected nights/weekends, PH impacts, higher duties, missed breaks/on-call/travel, classification drift.

Risk Dial (Don’t Ignore It)

From 1 January 2025, intentional underpayments are criminal. Honest mistakes aren’t crimes—but after these rulings, “we didn’t know” won’t fly. Governance matters.

Final Word from the IR Geek

This is a risk/compliance trade-off: crank the compliance dial (Model A) and pay precisely, or crank the salary dial (Model B) and pay more up front. Either way, the non-negotiable remains: meet the Award every pay period—and prove it. Pick your model, wire it into contracts and payroll, and never skip the “extreme event” check. 👓⚖️

Want this translated into airtight clauses, SOPs, and a one-pager for employees—tailored to your Award mix and pay cycles? Contact the IR Geek—Justin @ LevelUp—for a conversation.