2 Ways the Budget Affects You

The 2014 budget may affect many different aspects of your business. Here are 2 changes that may affect both staff and employers.

1. Superannuation Guarantee increase delayed

Effective from 1 July 2014, the Superannuation Guarantee percentage has increased to 9.5% from the current 9.25%.

The Superannuation Guarantee percentage will gradually rise to 12 % by July 2022,

Superannuation Guarantee is the official term for compulsory superannuation contributions made by employers on behalf of their employees. An employer, whether they are a small or large business, must at this time, contribute the equivalent of 9% of an employee’s salary.

The new increases are laid out in the table below:

Financial year	Superannuation guarantee
July 2014-June 2015	9.5%
July 2015-June 2016	9.5%
July 2016-June 2017	9.5%
July 2017-June 2018	9.5%
July 2018-June 2019	10.0%
July 2019-June 2020	10.5%
July 2020-June 2021	11.0%
July 2021-June 2022	11.5%
July 2022-June 2023	12.0%

The Superannuation Guarantee has financial implications for anyone planning to remain in the workforce for more than 7 years as the increase of 3% will take full effect in just over 6 years’ time. According to the Federal Government, the 33% increase will give a 30 year old on average full time wages an extra 108, 000 in retirement savings.

2. Changes to the Fair Entitlement Guarantee

One of the other important changes the 2014 federal budget delivered was alterations to the fair Entitlements Guarantee, which guarantees several unpaid employee entitlements in the event of insolvency or bankruptcy.

From January 1 2015 the maximum payment for redundancy pay will be 16 weeks. Previously redundancy pay was capped at 4 weeks’ pay per full year of service. From 1 July 2014, indexation of the maximum weekly wage used in calculating entitlements for claimants earning above the maximum weekly wage of $2,451 will be paused until 30 June 2018.

The changes will apply only to liquidations and bankruptcies that occur on or after the commencement date of 1 January 2015.

Employees seeking to claim an entitlement above the maximum will maintain rights as unsecured creditors to recover any outstanding entitlements through the winding up of their employer’s business.

The Government will achieve savings of $87.7 million over four years by aligning redundancy payments under the Fair Entitlements Guarantee scheme to the National Employment Standards contained in the Fair Work Act 2009.

The savings from this measure will be redirected by the Government to repair the Budget and fund policy priorities.

Changes to Bullying Measures in the Fair Work Act - 1 Jan 2014

Under the Work Health and Safety Act 2011, employers are obliged to take all reasonably practicable steps to manage health and safety risks in their workplaces.  Bullying is one such health and safety risk, and failure to manage and prevent bullying could constitute a breach of the Act and could have serious repercussions, not just for those bullying or being bullied, but for your organisation as a whole.

As from 1 January 2014, the Federal Government will introduce new federal anti-bullying laws which are designed to stop workplace bullying promptly.  However, the laws do not give bullying victims an entitlement to monetary compensation or reinstatement of their position.  From 1 January 2014, a worker who is being ‘bullied at work’ or believes they have been bullied at work will be able to apply directly to the Commission for an order to stop the bullying.

These new laws will cover contractors, subcontractors, outworkers, apprentices, trainees and students gaining work experience as well as volunteers.

Under the new provisions, a worker can bypass his or her employer and lodge a claim directly with the Commission. The Commission is required to deal with an application within 14 days after the application is made - the time limits will mean an employer will have very little time to investigate, assess, and respond to a claim. Under the new laws, employees can formally require the Fair Work Commission to order employers to take action against bullying colleagues and managers. The FWC will have the power to issue an order to the alleged bully or bullies, to put a stop to the disputed behaviour. 

With the introduction of these new laws, it is essential that an organisation has an effective workplace bullying policy which includes:

1. a definition of workplace bullying, including a statement that workplace bullying is unlawful;

2. a complaints process; and

3. information about the consequences for a worker who has engaged in workplace bullying.

Bullying is defined as follows:

A worker is bullied at work if an individual or a group of individuals repeatedly behaves unreasonably towards the worker or a group of workers of which the worker is a member and that behaviour creates a risk to health and safety. 

It is irrelevant whether the individual or individuals who are bullying intend to bully the victim.

It is important to note that bullying involves repeated unreasonable behaviour. An isolated incident is insufficient. 

Importantly, the definition has retained the exemption for reasonable management action which is carried out in a reasonable manner.  (A performance assessment/review that you disagree with will not constitute bullying!) 

Bullying can include more obvious and overt behaviours, such as: 

•                    intimidation

•                    verbal abuse

•                    assault

•                    physical aggression/violent behaviour

•                    spreading rumours about someone

•                    constant name calling

•                    practical jokes

•                    harassment/sexual harassment,

•                    trolling on social media.

But bullying can also include behaviours such as:

•                    constant unjustified criticism or complaints

•                    constant threats to sack or demote

•                    excluding someone from workplace activities

•                    inconsistent and arbitrary enforcement of rules

•                    setting unreasonable timelines

•                    deliberately changing work arrangements in order to inconvenience someone

•                    setting tasks that are unreasonable

•                    excessive scrutiny of work performance

•                    withholding information or tools required to perform work, and

•                    taking credit for another employee's work and failing to acknowledge that employee.

Examples of the sorts of orders the Commission may make include:

•             regular monitoring of behaviours by an employer;

•             compliance with the employer’s workplace bullying policy;

•             provision of information by the employer;

•             additional training to employees; and

•             amendment of the employer’s workplace bullying policy.

What will this mean for Employers?

It would be expected that employers' processes for handling complaints about bullying will be in the spotlight. Therefore, over the next few months until 1/1/2014, it will be important that employers use the time remaining to review and improve their policies and framework regarding bullying. 

Businesses should ensure that performance management and investigation processes are fair and reasonable.

They should have appropriate policies that detail the action taken when an employee makes a grievance or complaint about bullying behaviour, and appropriate mechanisms in place for addressing concerns of workplace bullying.  All employees should have a copy of the policy, or at least know where and how to access the policy.

In the event of an application to the FWC, any workplace investigations conducted will be open to scrutiny. You must be able to show that you have acted with fairness. Organisations may also need to prove that they have given employees training or guidance in relation to their policy, so all employees are aware of what they need to do if they think they are being bullied.

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.

1 July 2013 - Changes to superannuation

From 1 July 2013, the super guarantee rate is going up from 9% to 9.25%. This will increase to 9.5% from 1 July 2014 and continue to rise each year gradually over 7 years until it reaches 12% from 1 July 2019.

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.

Can an employee’s pay be reduced to cover the superannuation increase?
Employees can’t be paid less than the minimum wages that apply to them.
If an employee is paid more than their minimum entitlements and if their employer wants to reduce their wages to compensate for the increased super rate or for any other reason, the employer should seek independent advice from a lawyer or their employer association.

Changes to pay slip requirements
There are also changes to the information that needs to be included on pay slips. From 1 July 2013, employers will be required to give additional information about the superannuation contributions they have made or will make for the benefit of their employees.

Start date	Super guarantee rate
1 July 2013	9.25%
1 July 2014	9.50%
1 July 2015	10%
1 July 2016	10.50%
1 July 2017	11%
1 July 2018	11.50%
1 July 2019	12%

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

Changes to Fair Work Act

On Wednesday 28 November 2012, Federal Parliament passed the Fair Work Amendment Act 2012 (Cth) (Amendment Act) which implements a number of recommendations of the Fair Work Act Review Panel.

The changes to the Fair Work Act 2009 implemented by the Amendment Act are mostly administrative and technical in nature, and to that extent will not make a major difference to employers’ workplace arrangements.

However, there are some significant changes to the FW Act provisions dealing with unfair dismissal and general protections claims, certain aspects of agreement-making, and ballots for protected industrial action that employers need to be aware of. Changes have also been made to the structure and operation of Fair Work Australia (FWA), and the tribunal has been given new functions in relation to default superannuation funds in modern awards.

The Government’s intention in changing the unfair dismissal provisions of the FW Act is “to ensure the right of an employee to bring an unfair dismissal claim is better balanced against the right [of] an employer to ensure they are required to respond to applications that are genuine, and to ensure that [FWA] has the power to deal with unreasonable conduct in relation to a claim”. Whilst on the face of them, these changes appear beneficial to employers, the strong likelihood is that they will, in practice, provide little relief to employers from the challenges of the unfair dismissal regime.

The key changes that will be implemented are summarized as follows:

Contracts and Enterprise Agreements

1.  Individual union officials will not be able to act as bargaining representatives for employees not covered by the official’s union.
2.  Employees will not be able to opt out of an enterprise agreement.
3.  Employers will be prohibited from making enterprise agreements with only one employee.

Unfair Dismissal

4.  Aligning the timeframes for making unfair dismissal claims and general protections dismissal claims at 21 days.  The time limit for lodging an unfair dismissal claim has been extended from 14 to 21 days from the date that the dismissal takes effect. The time limit for lodging a general protections claim based on dismissal has also been changed from 60 days to 21 days. This should be welcomed by employers, as employees will now need to decide whether to lodge an unfair dismissal or a general protections claim (rather than one, followed by the other; or the pursuit of a general protections claim that should properly have been brought as an unfair dismissal claim).

5.  Under certain circumstances Fair work Australia will be capable of dismissing unfair dismissal applications at their discretion. This will apply where the parties have concluded a settlement agreement, when an applicant fails to attend a proceeding relating to the application or where the application fails to comply with Fair Work Australia directions or orders relating to the application.

6.  Fair Work Australia will be able to demand a party pay costs if through an unreasonable act or omission they have caused the other party to incur a cost. This recommendation reflects concerns that unscrupulous lawyers or agents are encouraging dismissed employees to pursue unfair dismissal claims without merit on a no-win, no-fee basis. They can also demand a party pay a cost order if they fail to agree to a settlement that is deemed reasonable.

Change of Name

7.  It was proposed that the name of Fair Work Australia would be changed to a new title containing the word ‘Commission’ and no longer containing the words ‘Fair Work’ due to the considerable confusion caused by having a number of agencies with similar names (e.g. FWA, the Fair Work Ombudsman (FWO), and more recently Fair Work Building and Construction (FWBC).

The Amendment Act has made several important changes to the structure and operation of FWA, and has re-named  the tribunal as the Fair Work Commission (FWC). The Government opted for FWC, indicating that the word “Commission” more accurately reflects the tribunal’s functions.

Superannuation

8. The establishment of an ‘Expert Panel’ to deal with minimum wage decisions and default superannuation funds for employees who do not nominate their own superannuation fund and are covered by a modern award.

The commencement date of the changes introduced by the Amendment Act is currently unclear.

As an employer, you should obtain advice about how these changes affect your contracts, Enterprise Agreements and HR policies and procedures.

Be aware what the pending changes to unfair dismissal could mean for you as an employer:

• check the date of unfair dismissals applications and general protection claims relating to a termination of employment complies with the new time limits; 
• seek advice on whether the applicant's initial documentation lodged with the Fair Work Commission provides sufficient information about the alleged circumstances of their dismissal;
• seek advice on whether there are grounds to apply for a cost order; and
• seek advice on whether there is scope to apply to the Fair Work Commission for an unfair dismissal application to be dismissed.

To minimize your risk as an employer, you should consider contacting Annette at End2End Business Solutions on (02) 8977 4002 for advice on employee dismissals for your business.