30 Jun HR LAW NEWSLETTER – JUNE 2022

Welcome to the June 2022 Newsletter.   This month HR Law focuses on important changes coming into effect 1 July 2022.  A summary of the changes businesses need to be aware of coming into effect are as follows:

• HIGH INCOME THRESHOLD INCREASE

From 1 July 2022, the high income threshold will increase from $158,500.00 to $162,000.00.

Employees who earn over the high income threshold are considered “high income employees” under the Fair Work Act 2009 (Cth) (“FW Act”) and if they enter into a guarantee of annual earnings with their employer (which must be very clearly and carefully drafted in an employment contract):

• No Modern Award will apply to that employee; and

• The employee cannot bring unfair dismissal proceedings against their employer following the termination of their employment.

Employers who have already entered into a guarantee of annual earnings with one or more of their employees should undertake a review of their employee/s salary to ensure that their salary exceeds the new high income threshold (i.e. $162,000.00), or will be increased to be in line with, if not more than, the high income threshold.

• CAP ON UNFAIR DISMISSAL

The maximum amount that an employee may recover if their unfair dismissal application is successful, will increase on 1 July 2022 from $79,250.00 to $81,000.00. This is applicable for unfair dismissals occurring on or after 1 July 2022. This is the upper limit for compensation in this jurisdiction, meaning that an employee will only be entitled to up to six months of their pay capped at $81,000.00.

By way of example, an employee who earns $60,000.00 per annum would only be entitled to compensation of up to $30,000.00 (i.e. six months’ pay) if their unfair dismissal application was successful.   An employee however, who earns $180,000.00 per annum (if still eligible to make an unfair dismissal claim) would only be entitled to compensation up to $81,000.00 rather than six months of their actual pay of $90,000.00.

• RATE INCREASES EFFECTIVE 1 JULY 2022

As you may be aware, the Fair Work Commission delivered its annual wage review 2021/2022 decision, announcing the National Minimum Wage is increasing from $772.60 per week or $20.33 per hour to $812.60 per week or $21.38 per hour from 1 July 2022. This is an increase of $40.00 per week or $1.05 per hour.

• MODERN AWARDS

The Fair Work Commission decided to increase Modern Award minimum wages by 4.6% subject to a minimum increase for adult award classifications of $40.00 per week. The $40.00 per week increase is based on a 38-hour week for a full-time employee. In effect, Modern Award minimum wage rates above $869.60 per week will receive a 4.6% adjustment, while wage rates below $869.60 per week will be adjusted by $40.00 per week. Similar to previous years’ annual wage review decisions, wage increases will be staged over two dates, being 1 July 2022 and 1 October 2022 (for employees in the aviation, tourism and hospitality sectors).   Employers should ensure they are aware of which Modern Award relates to which staged increase date. 

You can read our previous article on the increases to Modern Awards here: https://www.hrlaw.com.au/hr-law-alert-annual-wage-review-2021-2022/

• SUPERANNUATION CHANGES

Two important changes to the superannuation guarantee will commence from 1 July 2022 as follows:

• the minimum superannuation guarantee percentage will increase from 10% to 10.5%; and

• the $450.00 per month superannuation guarantee threshold will be removed.

Employers will need to ensure that they pay their employees the minimum superannuation guarantee rate of 10.5% from 1 July 2022.  Now is the time to start planning how this superannuation guarantee increase will be implemented and communicated.  Employers need to consider the effect this will have on employees whose remuneration is inclusive and exclusive of superannuation and any amendments which may be required to the terms regarding their employment.

By removing the $450.00 per month superannuation guarantee threshold, employees earning less than $450.00 per month will now be eligible for the superannuation guarantee payment. For some employers, this may mean paying superannuation to its employees for the very first time.  These employees will need to be provided with a superannuation Standard Choice Form.   If an employee does not provide the employer with their choice of super fund, the employer is required to follow the superannuation stapling provisions. 

Employers should act now and update payroll software so that the employees’ superannuation guarantee entitlement is paid correctly or clarify with their payroll provider prior to 1 July 2022 how the change will be implemented in the payroll system. 

INSURER AGREES THAT AN ON-DEMAND DELIVERY RIDER WAS AN EMPLOYEE

In a decision considered a first of its kind to treat a gig economy worker as an employee, compensation of just over $800,000.00 (plus interest) has been awarded to the family of a food delivery driver who was hit by a bus and killed in late 2020.  The insurer, icare NSW’s insurance agent, Employers Mutual Limited agreed with the Transport Workers Union (“TWU”) and backed lawyers that the worker was an employee of Hungry Panda, thereby entitling the immediate family and dependent China-based father to death benefits and other compensation under the Workers Compensation Act 1987 (NSW).

This was a welcomed decision by the TWU as workers in the gig economy are generally not afforded the same rights as employees in other industries.   Those workers engaged in the gig economy tend to be classified as independent contractors and as such, are not entitled to access workers compensation or annual leave and sick leave.

On a somewhat different but related note, the Hearing for Menulog’s push for a standalone gig economy Modern Award has been rescheduled to 11 July 2022.  Menulog’s position on a separate Modern Award hit a problem in January 2022 when the Fair Work Commission concluded that the work of food delivery riders/drivers is currently captured by the Road Transport and Distribution Award 2020.  The Fair Work Commission at paragraph [55] stated “We conclude that the Road Transport Award currently covers employers and their courier employees in the “on demand delivery services industry” as defined in Menulog’s proposed award, and that the Fast-Food Award does not cover such courier employees. It also necessarily follows from this conclusion that the Miscellaneous Award does not cover them by reason of clause 4.1 of that award”. The Fair Work Commission decision can be accessed here:  https://www.fwc.gov.au/documents/decisionssigned/html/2022fwcfb5.htm

We will keep you up to date with any further developments.

The content of this article is intended to provide a general guide to the subject matter.  Specialist advice should be sought about your specific circumstances.