Published September 2022
In June 2022, the Fair Work Commission announced increases to the National Minimum Wage and Modern Award wages. It was also announced that these increases would occur over 2 stages, with the first rollout taking place from 1st July and the second rollout taking place from 1st October 2022.
We are now approaching the 1st October rollout, and it is important that Employers are aware of the changes, if the impacted Awards are applicable in your business.
WHICH AWARDS ARE IMPACTED?
The affected awards are listed below – the rates in these awards will increase from the first pay period commencing on or after 1 October 2022:
- Air Pilots Award [MA000046]
- Aircraft Cabin Crew Award [MA000047]
- Airline Operations – Ground Staff Award [MA000048]
- Airport Employees Award [MA000049]
- Airservices Australia Enterprise Award 2016
- Hospitality Industry (General) Award [MA000009]
- Registered and Licensed Clubs Award [MA000058
- Restaurant Industry Award [MA000119]
- Alpine Resorts Award [MA000092]
- Marine Tourism and Charter Vessels Award [MA000093]
Don’t forget that super guarantee (compulsory employer contributions) increased from 10% to 10.5% from 1st July 2022.
Employer contributions will now continue to increase by 0.5% each financial year until contributions reach 12% in 2025. You can find out more about the further increases on the ATO website.
Employers should also be aware that from 1 July 2022, the $450 minimum income threshold was removed. This means all employees will now have an equal entitlement to superannuation contributions by their employer, regardless of their income. Read more on the ATO website here.
WHAT DO EMPLOYERS NEED TO DO?
- If your employees are covered by an affected award, familiarise yourself with the new rates, then ensure any necessary changes are passed on by the first full pay period starting on or after 1 October 2022.
- Now is also a good time to check that each employee is correctly classified under the Award level applicable for the work they perform and is receiving any applicable allowances.
- Any changes to employment details or entitlements should be confirmed in writing for each employee.
- Check that your payroll system is setup to pay superannuation correctly on any increased rates.
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 (increased) pay rates and ensuring the current pay rate for each employee is still at or above the new minimum.
You are not required to increase pay rates if they remain the same as or better than the new minimum rates (however, you can if you wish to).
ARE ALLOWANCES IMPACTED?
Some allowances will also be impacted by the increases. 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) or considered an ‘all purpose allowance’, these allowances will generally increase in line with the ‘standard rate’.
You should check the allowances applicable to your team once the Fair Work Commission has updated the Awards and pay guides, and also check that any applicable superannuation is calculating correctly.
WHAT ABOUT ENTERPRISE AGREEMENTS?
Employers should undertake a review of their enterprise agreement rates to ensure the increased Award rates don’t ‘leapfrog’ the enterprise agreement rates. Where they fall behind, EA rates should be increased to (at least) match the new Award minimum rates.
Employers who have committed to annual wage increases in their Enterprise Agreements should also review these provisions.
WHAT ABOUT FLAT RATES and IFA’s?
If you pay any employees a flat rate or have an Individual Flexibility Arrangement in place, 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 to ensure compliance.
WHAT ABOUT 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;
- 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 complicated, 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.
For more guidance about this update, or to find out how Edwards HR can support your business, contract our team today on 07 3568 0866.
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