The new financial year is just around the corner and there have been several recent changes to the human resource and industrial relations landscape that will begin to come into effect soon. As a part of all of our services, we ensure our clients are aware of HR changes that affect them. Ensuring and maintaining compliance can be difficult for businesses as industrial relations instruments can change frequently, making it hard to keep up. Our HR Advisors have summarised the recent changes coming into effect in the new financial year 2022-2023 below.
Annual Minimum Wage Increase
In June the Fair Work Commission announced an increase to the national minimum wage to be effective for most employees from the first full pay cycle in July. This year’s increase was aimed at assisting Australia’s lowest earners and is applied in two ways dependent on wage thresholds. The new National Minimum Wage will increase from $20.33 is $21.38 per hour, an increase of 5.2%. Where employees are paid an Award rate between $20.33 and $22.88 per hour, their rate will increase by $1.05 per hour. Where employees are paid an Award rate above $22.88 an hour their rate will increase by 4.6%. This increase will apply to most Awards from the 1st of July, except those in the tourism, airline and hospitality industries which won’t increase until the 1st of October 2022.
With the consequences of wage theft and underpayments likely to become increasingly severe employers must apply the wage increase to their pay rates. ProcessWorx HR Advisors recommend employers review their pay rates, including flat rates to ensure they are high enough to account for the increased minimum wage for ordinary hours as well as penalties, entitlements and casual employees.
In line with Superannuation legislation, all employers are required to increase Super contributions to 10.5% from the 1st of July 2022. The Superannuation increase is compulsory, and rates will continue to increase by 0.5% every year from July 1st until 2025. Failing to increase superannuation contributions to the legal threshold can result in underpayment of employees and penalties may be applied due to this being a breach of the Superannuation Guarantee Legislation. Employers will need to consider this increase in superannuation going forward for their budgets and wages.
As of the 1st of July 2022, the $450 a week minimum threshold will also be removed. This means that any worker regardless of income will be entitled to superannuation payments from their employer. However, limits still apply to workers under the age of 18 who need to work more than 30 hours a week to be entitled, unless covered by an agreement that states otherwise.
Annualised Salary Reconciliation
As a part of every new financial year, employers are required to reconcile employees annualised salaries with records of actual time worked to ensure they are not being underpaid as per modern Awards. This applies to employees who are not on Individual Flexibility Agreements (IFAs). Annualised salary reconciliation requires employers to; collect timesheets, calculate exact entitlements based on timesheets, compare Award entitlements to what was actually received and notify or backpay employees as a result of the review.
The purpose of this is to ensure that the annual salary accounts for the employee’s true hours of work as they would be paid under the Award, to prevent underpayments from occurring. ProcessWorx clients who are using an IFA for employees do not need to complete the reconciliation and only need to ensure employees are paid better than the minimum entitlements in the Award this is done by ensuring your actual hours of work reflect the better off overall calculation conducted for the employee. Salary reconciliation is a requirement in certain modern Awards including, Clerks – Private Sector, Banking, Finance and Insurance, Health Professionals and Support Services, Pharmacy Industry and Manufacturing Award.
Extensive Changes to the SCHADS Award
In May the Fair Work Commission announced extensive changes to the Social, Community, Home Care and Disability Services Industry Award. These changes will come into effect from the first full pay period after July 1st, 2022. This includes changes to the minimum pay rates, minimum engagement periods, broken shift allowances, remote work rules and shift work. The changes to the Award are extensive and specific to work circumstances, so we recommend speaking with a ProcessWorx HR Advisor directly to understand and implement the changes in your business.
To protect your business from ongoing changes to the HR and IR landscape your broader HR system must be compliant and up to date. If you need assistance implementing the above changes in your business, please contact ProcessWorx and we can assist you with your HR compliance.
If you would like more information about HR or industrial relations for your business, contact the ProcessWorx HR consultants on (08) 9316 9896. Visit our website for more information on HR and Work Health and Safety support for business owners https://www.processworx.com.au/