What every employer MUST know for 1 July 2022

With the commencement of a new financial year, it brings with it important changes and new rates which will apply from 1 July 2022.

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 5.2% to become $812.60 per week or $21.38 per hour
the increase to the NMW will come into operation on 1 July 2022
in addition:
- (a) special NMW rates apply to employees with disabilities, junior employees, apprentices, and those on training arrangements
- (b) the minimum casual loading remains unchanged at 25%

minimum wages to most modern awards increase by the higher of $40 per week or 4.6% (starting on the first full pay period on or after 1 July 2022)
delays apply to the minimum wage increases in certain aviation, hospitality and tourism-based modern awards, which will take effect on 1 October 2022
absorption of wage increases into over-award payments remains permissible (subject to the terms of the relevant employment agreement and what other amounts are being absorbed into any annualised wage arrangement)
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 reviewed to ensure they continue to properly absorb/include all relevant minimum Modern Award amounts and that they continue to meet any technical notification and reconciliation requirements applying to annualised wage arrangements in certain Modern Awards

With enterprise agreements:

they must always meet or exceed the minimum wage of:
- (a) the relevant Modern Award (ie, the Modern Award that would have applied had the enterprise agreement not been in existence)
- (b) 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)

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

With the HIT:

it increases to $162,000
it impacts:
- (a) 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)
- (b) the maximum amount of compensation payable in an unfair dismissal claim (which increases to $81,000)
- (c) 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)

The tax-free component of a genuine redundancy payment increases to be:

With superannuation:

the maximum superannuation contribution base increases to $60,220 per quarter ($240,880 per annum)
an employer is not required to make superannuation contributions on behalf of employees on earnings in excess of that maximum contribution base

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