The 1 July changes that will impact your business

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.

Minimum wage
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.

High-income threshold
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.

Changes to penalty rates
The Fair Work Commission issued a decision in February 2017 regarding changes to penalty rates under modern awards. The decision highlighted the belief that Sunday and public holiday penalty rates did not achieve the purpose of modern awards and therefore, it was decided to reduce these rates progressively over 3 or 4 years.

On 1 July 2017, penalty rates for employees covered by the General Retail Industry Award, the Fast Food Industry Award, Hospitality Industry Award, Restaurant Industry Award and the Pharmacy Award will be reduced.

General Retail Industry Award

• Sunday penalty rates for full and part time employees will be reduced from 200% to 195%
• Sunday penalty rates for casual employees will be reduced from 200% to 195% (inclusive of loading)
• Public holiday penalty rates for full and part time employees will be reduced from 250% to 225%
• Public holiday penalty rates for casual employees will be reduced from 275% to 250%

Fast Food Industry Award

• Sunday penalty rates for Level 1 full and part time employees will be reduced from 150% to 145%
• Sunday penalty rates for Level 1 casual employees will be reduced from 175% to 170% (inclusive of loading)
• Public holiday penalty rates for full and part time employees will be reduced from 250% to 225%
• Public holiday penalty rates for casual employees will be reduced from 275% to 250%
• Employees who work late nights on Monday to Friday will be paid 10% extra for hours between 10pm and midnight and an extra 15% for hours between midnight and 6am

Hospitality Award

• Sunday penalty rates for full and part time employees will be reduced from 175% to 170%
• Public holiday penalty rates for full and part time employees will be reduced from 250% to 225%
• Public holiday penalty rates for casual employees will be reduced from 275% to 250%
• Employees who work on Christmas Day if it falls on a weekend and it’s not declared a public holiday will be paid an extra 25% of their base rate and also get a substitute day off
• Full and part time employees can agree to get 125% of their base rate of pay for work on a public holiday instead of 225% if they get the equivalent time added to their annual leave or take a paid day off in the same week as the public holiday

Pharmacy Award

• Sunday penalty rates for full and part time employees will be reduced from 200% to 195%
• Sunday penalty rates for casual employees will be reduced from 225% to 220% (inclusive of loading)
• Public holiday penalty rates for full and part time employees will be reduced from 250% to 225%
• Public holiday penalty rates for casual employees will be reduced from 275% to 250%

Restaurant Award

• Public holiday penalty rates for full and part time employees will be reduced from 250% to 225%
• Employees who work late nights on Monday to Friday will be paid 10% extra for hours between 10pm and midnight and an extra 15% for hours between midnight and 6am
• Employees who work on Christmas Day if it falls on a weekend and it’s not declared a public holiday will be paid an extra 25% of their base rate and also get a substitute day off
• Full and part time employees can agree to get 125% of their base rate of pay for work on a public holiday instead of 225% if they get the equivalent time added to their annual leave or take a paid day off in the same week as the public holidayNew workplace laws
  There are also two new proposed workplace laws, which haven’t yet come into effect, but are likely to in the coming months.

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 aims to ensure the Fair Work Act is equipped to deal with deliberate and persistent non-compliance, as some employers believe they are unlikely to get caught or the penalty is too low to worry about in the current Act. In response, this Bill seeks, amongst other things, to increase maximum civil penalties, place greater liability on franchisors and holding companies when they knew or ought to have known their franchisees or subsidiaries were non-compliant, and provide the FWO with powers to gather evidence in line with other regulators such as the Australian Securities and Investment Commission (ASIC).

The Fair Work Amendment (Corrupting Benefits) Bill 2017 aims to improve governance of registered organisations. It introduces criminal offences for giving or receiving a “corrupting benefit” and when employers pay employee organisations or prohibited beneficiaries’ illegitimate payments or a party receives any prohibited payment. Additionally, individuals bargaining for enterprise agreements must disclose certain financial benefits.

Paid parental leave
Late last year, Social Services Minister Christian Porter announced the Coalition intended to revise the current Federal Government’s Paid Parental Leave (PPL) Scheme to prevent “double dipping”. The Coalition intended to stop employees who received parental leave benefits from their employers from also accessing the PPL Scheme, which provides payments at the national minimum wage for up to 18 weeks.

However, during the announcement of the Federal Budget in May 2017, the Coalition declared they were not continuing to pursue plans to alter the current system. As such, the PPL Scheme remains unchanged and employees are able to access both the government’s paid parental leave scheme and their employer’s scheme, if there is one.