The beginning of the financial year marks a number of important changes to the employment law area. These changes, relate to minimum wages, the unfair dismissal threshold, the Fair Work Information Statement and changes to the Superannuation Guarantee rate. A summary of the changes to come and what this means for your business is covered in this client alert.
We also note that the Federal Government on 24 June 2021, also introduced legislation into the Senate that seeks to amend the Fair Work Act 2009 (Cth) (“FW Act”) and Sex Discrimination Act 1984 (Cth) to respond to the Sex Discrimination Commissioner’s Respect@Work report. The changes to the Fair Work Act extend to:
- clarifying that an anti-bullying order is available in the context of sexual harassment;
- amending section 387 of Fair Work Act to clarify that sexual harassment can be conduct amounting to a valid reason for dismissal in determining whether a dismissal is harsh, unjust or unreasonable; and
- changing the definition of “serious misconduct” to include sexual harassment.
MINIMUM WAGE INCREASE
Each year the Fair Work Commission (“FWC”) performs a review on the national minimum wage and pay rates for all industries. In this regard, the FWC has announced an increase to minimum wages in Australia by 2.5% which has now set the national minimum wage at $772.60 per week or $20.33 per hour. This constitutes an increase of $18.80 per week to the weekly wage.
The increase will affect both the National Minimum Wage and Modern Awards. However, industries affected by COVID-19 have been afforded some relief will the increase for specific Modern Awards being delayed. The increase to minimum Modern Award rates will occur as follows:
From 1 July 2021
All Modern Awards other than those specified below will increase from 1 July 2021.
From 1 September 2021
The minimum rates for the General Retail Industry Award 2020 will increase from 1 September 2021.
From 1 November 2021
The minimum rates will increase from 1 November 2021 for the following Modern Awards:
- Air Pilots Award 2020;
- Aircraft Cabin Crew Award 2020;
- Airline Operations – Ground Staff Award 2020;
- Airport Employees Award 2020;
- Alpine Resorts Award 2020;
- Amusement, Events and Recreation Award 2020;
- Dry Cleaning and Laundry Industry Award 2020;
- Fitness Industry Award 2020;
- Hair and Beauty Industry Award 2010;
- Hospitality Industry (General) Award 2020;
- Live Performance Award 2020;
- Mannequins and Models Award 2020;
- Marine Tourism and Charter Vessels Award 2020;
- Nursery Award 2020 and Racing Clubs Events Award 2020;
- Racing Industry Ground Maintenance Award 2020;
- Registered and Licensed Clubs Award 2020;
- Restaurant Industry Award 2020;
- Sporting Organisations Award 2020
- Travelling Shows Award 2020; and
- Wine Industry Award 2020.
The decision means that employers who pay their employees at the National Minimum Wage (and under certain industrial instruments) will need to increase their employees pay from the first pay period on or after 1 July 2021.
For those employers who pay minimum wage rates under a Modern Award (and certain industrial instruments), you will be required to increase employees’ pay in the first pay period following the date the Modern Award increases (i.e. 1 July 2021, 1 September 2021 or 1 November 2021).
Lastly, it is important for employers to ensure that those employees covered by a Modern Award and receiving an “all up” salary or wage which is intended to compensate an employee for penalty rates, overtime, leave loading and the like, is still sufficient given the increase. This is one particular area where we see most employers get it wrong as employers commonly believe they do not need to review an employee’s remuneration if they are receiving an annual salary above the Modern Award wage. However, this is not the case, and it is important employers ensure all-up remuneration arrangements are sufficient having regard to increases to the Modern Award regime and National minimum wage.
In this regard, we recommend employers conduct an audit on salaries to ensure they are in fact sufficient to cover the requirements prescribed by law.
UNFAIR DISMISSAL THRESHOLD
The rules that determine whether an employee is entitled to bring a claim for unfair dismissal under the Fair Work Act 2009 (Cth) state that employees who earns more than the high income threshold and who are not covered by a modern award or enterprise agreement, cannot make an unfair dismissal claim.
Whether an employee is protected under the unfair dismissal scheme may have significant impact on an employer’s ability to dismiss an employee and the process and potential risks of doing so.
The high-income threshold is currently $153,600 excluding superannuation. However, this will be increased from 1 July 2021. The new high-income threshold is yet to be announced.
FAIR WORK INFORMATION STATEMENT
The Fair Work Act 2009 (Cth) requires that an employer provide all new employees a copy of the Fair Work Information Statement as published by the Fair Work Ombudsman before they start employment or as soon as practicable after their employment commences. A new Fair Work Information Statement is published each year to reflect the amended high income threshold.
In addition, given the new changes surrounding casual employees, the Casual Employee Information Statement was released earlier this year and a copy is now also required to be provided to all casual employees.
Both information statements provide employees information about their rights and conditions of employment. It is important to ensure that employers are providing the required statements to employees, and we recommend doing so when providing the contract of employment.
If you are unaware of the recent changes effecting casual employees and currently employ casual workers, we recommend you seek advice in this regard.
CHANGES TO SUPERANNAUTION
The Superannuation Guarantee rate as currently legislated will increase from 9.5% to 10% with effect from 1 July 2021 with further increases of 0.5% per year to come from 1 July 2022 until it reaches 12% from 1 July 2025.
Accordingly, from 1 July 2021 not only will employers need to update their payroll settings to reflect the 0.5% increase in the SG rate, but importantly both employers and employees will need to consider whether this increase is absorbed by their current remuneration or is an additional payment. This will very much depend on the terms of the individual employment contracts.
In particular, the effect of the increase on particular salary packages needs to be carefully considered to determine whether the additional 0.5% superannuation contribution needs to be added on top of the existing salary package (which would not affect an employee’s take home wage) or incorporated into the existing salary package amount (which would affect an employee’s take home wage).
If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to your employment relations framework, please do not hesitate to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.