From Friday 1 July 2022, there will be a number of changes set to impact all Australian businesses.
These changes include increases to minimum wages, compulsory superannuation and penalty units in NSW.
The changes come as a timely reminder for businesses to review their contracts and industrial instruments.
It is also a good time for businesses to ensure that they are meeting their minimum obligations, and to confirm who will bear the increase to superannuation.
The national minimum wage is set to rise to $21.38 per hour (or $812.60 per week).
This is an increase of 5.2% or $1.05 in comparison to the 2021 rate of $20.33 per hour or $772.60 per week.
The minimum rates of pay outlined in most Modern Awards will increase by 4.6%.
For any Modern Award minimum rates below $869.60 per week, workers will receive a flat increase of $40 per week.
The increases will apply on 1 July 2022 to most Awards, with the exception of the following, which will come into effect on 1 October 2022 to allow for economic recovery from the COVID-19 pandemic:
- Aircraft Cabin Crew Award
- Airline Operations – Ground Staff Award
- Air Pilots Award
- Airport Employees Award
- Airservices Australia Enterprise Award 2016
- Hospitality Industry (General) Award
- Registered and Licensed Clubs Award
- Restaurant Industry Award
- Marine Tourism and Charter Vessels Award
- Alpine Resorts Award
These increases to Award rates are also a reminder for businesses to review any set-off clauses within their employment contracts, to ensure those clauses are effective and that employees are receiving an amount sufficient to cover the minimum Modern Award obligations.
Additionally, any business with an enterprise agreement must ensure that the minimum rate within the agreement is at least equal to the rate in the Modern Award; this applies regardless of whether the enterprise agreement has passed its nominal expiry date.
The amount of superannuation that employers are required to contribute to their worker’s super is also increasing.
From 1 July 2022, the guaranteed amount will increase from 10% to 10.5%.
Businesses may recall that this is part of the staggered increase of superannuation which will continue until 1 July 2025, when the target of 12% is achieved.
Additionally, businesses should review their worker’s contracts to confirm whether salaries are inclusive or exclusive of superannuation.
If the employment contract states the amount is exclusive, then businesses will bear the cost of the additional 0.5%. Regardless, this does not prevent a business from choosing to absorb the increase, rather than reduce their workers take home salary.
If your business is thinking about taking on this absorption, we recommend getting in touch with Holman Webb’s Workplace Relations Partner Alicia Mataere for further advice.
Penalty increases for SafeWork
The value of a penalty unit under the Work Health and Safety Act 2011 will also increase to an estimated $107.47, up from $102.95 in the 2021/22 financial year.
This is a significant increase and is reflective of the CPI increase in the last financial year.
In other news, the value of Federal civil penalty unit will remain at $222 and will not increase in the 2023 FY.
High Income threshold/compensation cap
Every year the high income threshold for employees (not covered by a Modern Award) to access the unfair dismissal jurisdiction within the Fair Work Commission is re-evaluated.
This year, the threshold will be raised from $158,500 to $162,000.
Accordingly, employees will be prevented from making an unfair dismissal claim if their salary exceeds this amount and they are not Award covered.
Similarly, the maximum compensation cap has increased to $81,000 (half of the high income threshold) for unfair dismissal claims.
If you have any queries about the application of these increases and how they will impact your business, please contact Workplace Relations Partner Alicia Mataere or Senior Associate Lee Pike, who will be able to assist you.