With the commencement of a new financial year, it brings with it important changes and new rates which will apply from 1 July 2018.
NEW! High Income Threshold (HIT)
With the HIT:
- it increases on 1 July 2018 to $145,400
- it impacts:
- who can make a claim for unfair dismissal (for those not covered by a Modern Award or to whom an enterprise agreement does not apply)
- the maximum amount of compensation payable in an unfair dismissal claim
- those on a ‘guarantee of annual earnings’ (a Modern Award does not apply to an employee whenever this guarantee is in place provided it continues to meet the relevant legislative requirements)
NEW! Modern Award Increases
With Modern Awards (including enterprise awards):
- minimum wages increase by 5% (starting on the first full pay period on or after 1 July 2018)
- absorption of wage increases into over-award payments is permissible (subject to the terms of the relevant employment agreement and what other amounts are being absorbed into any annualised salary)
- increases to the minimum wages of junior workers, apprentices, trainees, piece workers and employees on the supported wage system will occur
- expense-related allowances in Modern Awards will increase as set out in the Modern Award (eg, by the applicable CPI index figure)
- annualised salaries will need to be checked to ensure they can still properly absorb/include all relevant minimum Modern Award amounts and that they continue to meet the technical requirements of the relevant Modern Award
NEW! National Minimum Wage (NMW)
With the NMW:
- this is applicable to employees to whom neither a Modern Award or enterprise agreement applies
- the NMW increases by 5% to become $719.20 per week or $18.93 per hour
- in addition:
- special NMW rates apply to employees with disabilities, junior employees, apprentices, and those on training arrangements
- the minimum casual loading remains unchanged at 25%
NEW! Impact on Enterprise Agreements
With enterprise agreements:
- they must always meet or exceed the minimum wage of:
- the relevant Modern Award (ie, the Modern Award that would have applied had the enterprise agreement not been in existence)
- the NMW (ie, where a Modern Award would not apply even if the enterprise agreement was not in existence)
- thus, pay rates in enterprise agreements may need to be increased (even if the enterprise agreement has its own wage increase regime)
NEW! The Sting
Be mindful that wage increases may have flow-on effects such as increasing:
- the value of leave loading, penalty rates, overtime and superannuation contributions
- the value of accrued leave entitlements
- the cost of wage related expenses such as payroll tax and workers compensation premiums
NEW! Redundancy
The tax-free component of a genuine redundancy payment increases to be:
- a base amount of $10,339
- an additional amount of $5,200 for each completed year of service
NEW! Superannuation Contributions Base
With superannuation:
- the maximum superannuation contribution base increases to $54,030 per quarter ($216,120 per annum)
- an employer is not required to make superannuation contributions on behalf of employees on earnings in excess of that maximum contribution base
Questions/Assistance
If you have any questions in respect of the above or would like any employment related assistance, please contact a member of our Matthews Folbigg Workplace Solutions employment law team on (02) 9635 7966 or julianac@matthewsfolbigg.com.au
DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.
