2014 WAGE DECISION: FWC orders 3% increase in minimum wages

1.5 Million Of Australia’s lowest paid workers will have a pay increase of 3% by July of this year. For a full-time employee working a 38-hour week the increase is $18.70 per week (50 cents per hour) to $640.90 per week, or $16.87 per hour.
 FWC President Justice Iain Ross announced the decision, noting that the increase in super guarantee from 1 July had a moderating impact.

The ACTU had originally asked for a $27 per week, or 4.3% increase but the Federal Government warned that increases that high would lead to a loss of jobs as some businesses would not find this affordable.

Ai Group had proposed a 1.6% or $10 per week increase, with ACCI's proposal even more conservative at 1.3%.
The panel suggested that it would not be as low if the superannuation guarantee rate was not also due to rise in July.

The Fair Work Commission last month ruled to limit Sunday penalty rates for some restaurant and cafe staff from July, expected to save businesses up to $112 million a year.

What this means for you

Modern Awards
Businesses that apply Modern Award rates will have to increase them to comply with the FWC decision. From 1 July 2014 all wage rates and penalties will need to match the applicable Modern Award.

Annualised Salaries and Individual Flexibility Agreements
if your business has utilised Individual Flexibility Agreements, you will have to review those agreements to guarantee employees are still “better off overall” when compared to the increased modern Awards rates.
 Employers who use annualised salary arrangements under Modern Awards should also check the Award requirements.

Enterprise Agreements
if you are currently negotiating an Enterprise Agreement or if you already have one, you should consider the increase to ensure that the rates that are negotiated are enough to pass the Better off Overall Test.
If you have an Enterprise Agreement, you will need to ensure the minimum base rates in the EA remain at least equal to the new Modern Award rates.

Allowances

The Fair Work Commission’s decision will impact allowances as well as base rates. A number of Modern Award allowances are expressed as a percentage of the "standard rate", which is the rate applicable to the trade’s equivalent classification in the award. These allowances will therefore increase in line with the increase in the standard rate. Expense related allowances will increase in line with the relevant CPI index.

High Income Guarantee
the High Income Threshold will also increase from 1 July.  Any employers who avoid Award conditions by using High Income Guarantees to will need to examine their agreed terms to remain compliant and above the new threshold. If guarantee levels fall below the threshold minimum entitlements will revert to those in the Award (including, for example, overtime and penalty rates).

Employers will have to identify and implement any changes promptly to ensure compliance to the Fair Work Commission’s decision.

1 July 2013 - Legal changes for Small Business

It's the new financial year and there are a raft of legal changes taking effect today for the business community to adhere to.  

In summary:

Minimum wage increase

Effective July 1, Australia's 1.5 million minimum wage workers are set to receive an additional pay raise of $15.80 per week, a 2.6 % increase over their existing wages.

The effect of this increase will see the National Minimum Wage increase from 1 July 2013 to $622.20 per week, or $16.37 per hour. The new rates will need to be paid from the first full pay period on or following July 1, 2013.

Increase in High Income Threshold/Unfair Dismissal

The high income threshold increases from 1 July 2013,

• the high income threshold increases to $129,300
• the compensation limit under unfair dismissal increases to $64,650.

The high income threshold is indexed annually on 1 July.

The high income threshold affects how modern awards apply to employees. It also affects employees’ ability to access unfair dismissal. Higher income employees are generally not allowed to apply for unfair dismissal since the terms of employment can be different above this threshold. As well as affecting unfair dismissal rights, the threshold impacts the maximum amount payable for an unfair dismissal case. This amount is capped at either half of the high income threshold or six months of the dismissed employee's wage.

Superannuation

From July 1, employers will contribute 9.25% to superannuation for each of their eligible employees, an increase of 0.25% from the current rate of 9%.
Also from July 1, businesses will be required to pay elderly people aged 70 and above superannuation entitlements, as the existing upper age limit for employee super guarantee eligibility will be removed.

If you were making super payments at the minimum 9% rate, you need to adjust payments to the new rate from 1 July 2013.

Superannuation is paid on top of the minimum entitlements in the award or agreement that applies.

Loss carry-back measures

Small businesses are now able to carry back their losses to offset past profits and receive a tax refund. Businesses can carry back up to $1 million in deductions against profits made in the previous year to receive a refund of up to $300,000 each year from tax previously paid – representing the company tax rate of 30 cents in the dollar.

MINIMUM WAGES INCREASED BY 2.6% - 1 July 2013

Effective July 1, Australia's 1.5 million minimum wage workers are set to receive an additional pay raise of $15.80 per week, a 2.6 % increase over their existing wages.

The effect of this increase will see the National Minimum Wage increase from 1 July 2013 to $622.20 per week, or $16.37 per hour.

Employers should also note that the minimum rates of pay within all Modern Awards will also increase from the first pay period on or after 1 July 2013.

What this means for employers:

1. Employers who pay above National Minimum Wage are not obliged to increase their rates of pay, but should make sure that they will not actually be underpaying employees once this increase is applied;
2. Employers who pay their employees at the National Minimum Wage will need to apply the increase in the first full pay period on or after 1 July 2013; and
3. Employers who pay under an enterprise agreements should ensure that those base rates are at least equal to or more than the respective increased minimum rates.

The 2013-14 wage rise is small compared from the 2012 pay hike, due to the country's below trend growth as well as the coming superannuation rise. Although less than what minimum wage workers wanted at $30 a week, it was still more than what the business groups said they can afford at only $5.80 a week. In line with the Federal Government’s submission, the increase does take into account “changes in living costs and the economic environment”.

For more information or assistance in assessing its impact on your business, please contact Annette at End2end Business Solutions on 02 8977 - 4002