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1-July

What changes are coming on 1 July?

With the new financial year fast approaching, businesses and human resource managers must now turn their minds to workplace planning and employee entitlements, having regard to new changes that will come into effect on 1 July 2016.

National minimum wage

As is required every year, the Fair Work Commission has reviewed the national minimum wage and has ordered a modest increase of 2.4%.

The national minimum wage was previously $656.90 per week or $17.29 per hour.

From 1 July 2016, the national minimum wage, which applies to employees who are not covered by an enterprise agreement or modern award, will be $672.70 per week or $17.70 per hour. This is a pay increase to the country’s lowest paid workers of $15.80 per week.

The Australian Council of Trade Unions (ACTU) had asked the Fair Work Commission for a $30 per week or 4.6% increase, whilst the Ai Group requested a rise of $10.50 or 1.6%.

The new rate of $17.29 is the lowest amount an adult employee can be paid if they are not otherwise covered by an enterprise agreement or modern award.

Award wages

As of 1 July 2016, minimum wages in all modern awards will increase by 2.4%, reflecting the same percentage increase as the one which applies to the national minimum wage.

This means that all award covered employees who are receiving minimum pay must receive a pay increase of 2.4%. Modern awards will be amended by the Fair Work Commission to reflect the increases to wages.

High income threshold

The high income threshold will increase from $136,700 to $138,900 on 1 July 2016.

This means that employees who earn over $138,900 will not be protected from unfair dismissal. Further, this could mean that employees who were previously above the threshold of $136,700 may no longer be above the new threshold amount and therefore, they may now be able to bring a claim if their salary has not been slightly increased.

Employers and human resource managers should carefully review the salaries of those staff who are close to the high income threshold, with serious consideration as to whether they should be increased above $138,900 in order to avoid the risk of an unfair dismissal claim.

It is important to remember that compulsory superannuation contributions are not included in the calculation of an employee’s remuneration for the purpose of the high income threshold. However, other items, such as the value of a car, work laptop and mobile phone can be included if properly documented by the company.

Things to watch

Over the next six months, businesses should also keep an eye out for:

  1. Changes to awards as part of the 4 yearly review of modern awards. At this stage, no date has been set by the Fair Work Commission as to when changes such as those relating to excessive annual leave accruals will be made to modern awards;
  2. Changes to the Fair Work Act as a result of the 2016 federal election. Both the ALP and the Coalition have stated that they will increase maximum civil penalties for breaches of the Fair Work Act, including underpayments. The Coalition has proposed to make amendments that will see franchisors, parent companies and directors liable for breaches of the Fair Work Act by their franchisees and subsidiaries, whilst the ALP has proposed to make it a criminal offence for those who deliberately exploit overseas workers.
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