2022 Critical Compliance Update
At the time of writing this article, the Fair Work Commission has recently handed down its decision following the Annual Minimum Wage Review process. The process involves the Commission reviewing submissions from various interested parties, including employer and employee representative groups, as well as analysing data relating to wages, such as changes to cost of living and alike.
Essentially, they are looking to ensure that the minimum wages set out in the Fair Work Act, including the National Minimum Wage, as well as al Award minimum rates of pay, is set at an appropriate level for our current economic conditions.
And hasn’t this years’ decision been interesting!
With issues such as inflation playing a key role in the decision making, the rising cost of living and the return to some sense of normal in this current stage of the pandemic, the Commission certainly has taken action.
Keeping up with compliance obligations is one of the key pain points employers face, especially when there is such frequent change as we’ve seen with the recent review of Modern Awards, changes to casual definitions, Superannuation increases and staggered Award increase processes over the Covid-19 pandemic.
To ensure you’re compliant from 1 July 2022, here are some key things you need to be aware of:
- From 1 July 2022 the National Minimum Wage increases by 5.2%, or $40 per week - so if you have minimum wage employees in your business, their wages need to increase from 1 July;
- From 1 July 2022 the compulsory superannuation guarantee contribution made by employers to eligible employees increases from 10% to 10.5% - so your super payments will be increasing from 1 July;
- From 1 July 2022 most Modern Award minimum rates of pay will increase by 4.6%, or $40 per week, whatever is higher. If you have employees who are paid under Award minimum rates of pay these will need to increase by 4.6%. There is a list of 10 Awards in the aviation, hospitality and tourism industry whose increases won’t take effect until 1 October 2022, but for the remaining 110+ awards, these increases are now in effect.
- From 1 July 2022 the $450 per month superannuation threshold disappeared. So if you have employees earning less than $450 per month, they will now be entitled to superannuation (with the exception of those under 18 years of age working less than 30 hours / week).
These are not insignificant increases. When you compare this to last least 2.5% increases, it’s doubled. Coupled with the rising cost pressures employers are facing from suppliers, the labour shortage generally and the upwards pressure on professional wages, it’s no wonder employers are finding this years’ increase difficult to swallow.
In addition to these Award rates increases, many of the penalties and allowances you may pay employees will increase in line with the wage changes – so if you pay penalties and allowances you will need to check these to ensure you remain compliant.
One of the additional compliance checks you want to make at this time as well is a check of your agreements, especially those which involve an annualised salary (or annualised salary agreement) or an individual flexibility agreement. Typically, you will have these in place if you pay your employees a higher hourly rate or annual salary, which includes their base rate of pay as well as allowances, penalties, loadings and alike. Failure to review these agreements annually can easily see an employer slip into an underpayment scenario, placing you at risk of back payment claims being made. So as your relevant Award increases, it’s the time to assess your flexibility agreements to ensure you remain compliant.
Overall, how can you ensure you keep up with compliance in an ever changing industrial relations environment? I recommend reviewing your compliance annually, at the very least, as well as any time there is a change which impact the Fair Work Act or the Modern Award system. You can access plenty of free information on the Fair Work website at www.fairwork.gov.au but if in doubt seek support from an accredited HR practioner.
An invitation:
Another way you can stay up to date with the latest compliance updates is to join us inside our free Facebook Group. Each week I am proving free training and updates in the group, so you’ll be alerted any time there is something new. Plus, it’s a great place to connect with other business owners, leaders and managers in a group focused on all things HR, people and team management we’d love for you to join us.