Published May 2023

INCREASE TO AWARD WAGES

As most of you will know, the Fair Work Commission generally increases award wages and some allowances every July* (from the first full pay period commencing on or after 1 July).

It is likely that we will receive the Commission’s decision in late June, leaving employers with only a short period to action any changes. This update provides guidance about how your team may be impacted and how to prepare for the changes.

We will advise our clients by email of any updates as we are made aware.

*One exception to this is the 15% award wage increase being applied to some employees covered by the awards listed below. These increases have been confirmed and take effect from the first pay period commencing on or after 30 June 2023. Our update about these can be found here.

• Aged Care Award
• Social, Community, Home Care and Disability Services Industry (SCHADS) Award
• Nurses Award

INCREASE TO SUPERANNUATION

Also from 1 July 2023, super guarantee (compulsory employer contributions) will increase from 10.5% to 11%.

Employer contributions will continue to increase by 0.5% each financial ear until contributions reach 12% in 2025. You can find out more about the further increases on the ATO website.

WHAT DO I NEED TO DO?

Employers should not wait until the decision is handed down in June. Action the steps below to ensure you are prepared by the relevant effective dates:

• If your employees are covered by national minimum wage or an award, keep an eye out for the new rates and effective dates then ensure any necessary changes are passed on by the first full pay period starting on or after the effective date relevant to the Award/s.
• Make sure your payroll system is ready to pay 11% superannuation from 1 July 2023.
• Now is a good time to check that each employee is correctly classified under the Award level applicable for the work they perform, and that every employee has an appropriate employment agreement and IFA (if applicable).
• If you are unsure whether you are paying people properly, read our Quick Guide here.
• If you pay a flat or loaded rate, ready our Quick Guide here to make sure you’re doing it properly.
• If you have an enterprise agreement, check whether an increase applies (more guidance on this below).
• Remember, any changes to employment details or entitlements should be confirmed in writing for each employee.
• If you require support with your annual reviews, please contact Edwards HR as soon as possible to book this in with our team.

FREQUENTLY ASKED QUESTIONS

WHY IS THIS IMPORTANT?

Wage compliance is a significant area of focus for the Fair Work Ombudsman so it’s important you get it right. There are heavy penalties and costly backpay obligations that may result if employers do not act on these changes.

WHAT IF I PAY ABOVE AWARD?

If you currently pay above the award minimum rate, we recommend checking the new minimum pay rates and ensuring the current pay rate for each employee is still above the new minimum.

You are not required to increase your pay rates if they remain the same as or better than the new minimum rates.

ARE ALLOWANCES IMPACTED?

Some allowances will also be impacted by this change. Where an allowance is expressed as a percentage of the ‘standard’ rate (which is linked to the wage of a particular classification in the Award), these allowances will increase in line with the ‘standard rate’. Some other allowances may also increase so be sure to check the award once updates are available.

WHAT ABOUT ENTERPRISE AGREEMENTS?

Employers should undertake a review of their enterprise agreement rates to ensure they continue to be better than the equivalent Award minimum rates. Where they fall behind, EA rates should be increased to match the new Award minimum rates.

Employers who have committed to annual wage increases in their Enterprise Agreements should review the specific wording and determine what is both viable and lawful in the current economic conditions.

If you are currently planning or negotiating a new enterprise agreement, the new Award rates will be your reference point for BOOT (better off overall test) baseline testing.

FLAT RATES & IFA’s

If you pay any employees a flat rate or have an Individual Flexibility Arrangement in place, and they are covered by an Award, you are required to ensure the employee/s remain better off overall when compared to the new minimum rates and allowances. We recommend undertaking an assessment of each arrangement (BOOT) to ensure compliance.

ANNUAL SALARIES

Employees paid annual salaries may be impacted in different ways depending, for example, on whether they are:

• Covered by an Award or EA;
• Award free and;
• Covered by an Award containing ‘annualised wage’ provisions.

We recommend reviewing the above, along with individual employee circumstances to ensure compliance. 

WHERE CAN I GET HELP?

Wage compliance is a significant area of focus for the Fair Work Commission so it’s important you get it right. Unfortunately, it’s also tedious and time consuming so let us help you!

Contact the Edwards HR team to understand how this decision may impact your business or to discuss how we can look after your wage assessment compliance needs.