As you may have noticed in the news in the last few months a few changes have occurred in the Wages Legislation. Here is an overview of those things taking effect on 1 July 2017.
Minimum Wage Update
If your business employs staff covered by a modern award and are paying at or near the minimum wage you will need to ensure you have reviewed their wages in line with the changes in minimum wages.
From 1 July 2017, the minimum wage in all modern awards will increase by 3.3%. Therefore, Employers need to increase wages to the Minimum pay under the relevant award, rounded to the nearest 10 cents. For all other employers, you need to ensure you raise your employee wages to the minimums of $694.90 per week, based on 38 hours or $18.29 per hour.
The Fair Work Ombudsman will investigate suspected or reported breaches and if you have not complied, your business will be ordered to back pay employees and you are likely to face significant penalties.
Changes to Wages – Penalty Rates
I’m sure you will have heard about the controversial changes to pay rates.
The decision by FWA affects penalty rates on Sunday and Public Holiday and will reduce these rates progressively over the next 3 or 4 years.
From 1 July 2017, penalty rates for employees covered by the General Retail Industry Award, Fast Food Industry Award, Hospitality Industry Award, Restaurant Industry Award and the Pharmacy Award will be reduced.
However, it is worth mentioning that these are just the minimum conditions. It is not obligatory to follow suit!
We have several recommendations for employers to consider:
- We strongly recommend an employer think carefully about cost vs. benefit of following the minimum standard. Our advice would be review how this fits with your business needs and values first. Employees tend to be pretty harsh when it comes to assessing how values are interpreted and pay is one way that a business communicates how they value employees.
- Think carefully about talent acquisition and retention and the caliber employees you are seeking before making your decision. Those employers offering higher than the legal requirement, will always attract the higher end of the talent market.
- Finally, you may to ‘grandfather’ current employees. This means that you chose not to reduce their pay in line with the award. This allows you to employ new staff on the new standard, therefore creating a hybrid approach.
Here is the new penalty rate information for quick reference:
The high-income threshold is the cap on salary to be protected from unfair dismissal. The new high-income threshold is $142,000.
It is important to remember that employees over the high-income threshold are still protected from adverse action and are afforded other protections under the Fair Work Act and other workplace laws if terminated.
Employers may wish to consider this threshold when reviewing basic salaries of employees who are paid close to this high-income threshold.
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This article is intended to provide commentary and general information. It should not be relied upon as comprehensive or legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. The HR Experts International is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.