The new financial year is just a few days away and whilst this is usually an extremely busy time of the year for most businesses, it’s also prime time for employers to review their employment framework, including the impact of increases to the minimum wage and high-income threshold, changes made to modern awards and new workplace laws that might affect your business.
For any business that has employees that are covered by a modern award and are paying at or close to the minimum wage under the award, it is important to review and increase employee’s minimum wages.
On 1 July 2017, the minimum wage in all modern awards will increase by 3.3%. Employers are required to increase the wages of any employee receiving minimum pay under an award by this amount, with weekly wages rounded to the nearest 10 cents.
For employees who are not covered by a modern award or enterprise agreement, they must be paid the national minimum wage, which as of 1 July 2017, will increase by 3.3% to $694.90 per week, based on 38 hours (from $672.70 in 2016-17) and $18.29 per hour (from $17.70 per hour in 2016-17).
It is crucial that businesses increase employee’s pay if they receive award wages or the national minimum wage. The Fair Work Ombudsman, who handles complaints regarding compliance with workplace laws and investigate if they suspect there is a breach, have recently been taking a very firm stance against businesses that fail to comply with minimum wages and this could result in being ordered to back pay employees and pay significant penalties.
The high-income threshold refers to the highest salary one can earn and still be protected from unfair dismissal. Anyone who earns more than the high-income threshold (and is not covered by a modern award or enterprise agreement) is not protected from unfair dismissal, however they are still protected from other actions relating to unlawful termination.
The high-income threshold will increase from $138,900 to $142,000 on 1 July 2017.
Employers may wish to review the salary packages of employees who are paid close to the high-income threshold. If they are, as of 1 July, being paid slightly less than the high income threshold, it may be worth considering whether to increase their salary above $142,000 in order to prevent the employee from being eligible to make an unfair dismissal application if their employment is terminated. When calculating whether an employee earns above the threshold, superannuation is not included. Other entitlements such as bonuses, provision of a mobile phone or company car are not included if (1) they are not guaranteed to be paid and (2) if a value has not been attributed to them in advance.
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 2009 (Cth) and other workplace laws.