💰 “Above Award” Salaries Might Not Save You Anymore — What Do You Think?

Okay HR fam — this one’s a big deal and it’s already shaking up how employers handle annualised or “set-off” salaries.

The Federal Court has recently ruled that you can’t rely on overpaying someone in one pay period to fix an underpayment in another — unless the award or the pay arrangement specifically allows it.

This came out of the Woolworths and Coles case (Sept 2025), where the Court made it crystal clear:

💬 “An overpayment in pay period A cannot be used to excuse an underpayment in pay period B.”

So, if you’ve been using an “above-award” salary to cover overtime or penalty rates across a longer period — that might no longer cut it.

⚖️ What the Court said:

Award entitlements have to be identifiable and paid within each pay period.
You can’t “pool” or “average out” wages unless the award allows it.
Section 323 of the Fair Work Act requires wages to be paid in the period they’re earned.

🚨 Why this matters:

This decision ramps up the compliance burden for anyone using annualised salaries.

It means employers must be able to prove — for every single pay period — that all entitlements were met.

If they can’t? That’s where underpayments start adding up fast.

For Woolies and Coles, remediation is estimated in the hundreds of millions.

So now I’m curious —

Do you think this decision will push more employers to ditch annualised salaries altogether?

Or will it finally push businesses to get serious about payroll accuracy and record-keeping?

Drop your thoughts below 👇

Would love to hear how your organisations or clients are approaching this after the ruling.

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