06 Jun ARE YOU READY FOR 1 JULY?

1 July is an important date for employers as it often signals changes to employees’ pay entitlements.

This year on 1 July employers need to be prepared and ensure that from 1 July 2017 they are paying the correct rates of pay.

Some significant changes that Employers should be prepared for on 1 July 2017 include the following:

MINIMUM WAGE SET TO INCREASE

The minimum wage is increasing from $672.70 per week or $17.70 per hour to $694.90 per week or $18.29 per hour from 1 July 2017.

Minimum rates under Modern Awards will also increase, in line with the increase to the minimum wage.

What should employers be doing? Now is the time employers should be preparing to make any necessary adjustments to the payments they make to their employees so that from 1 July 2017, they are paying award-free employees at least the national minimum wage and employees covered by a modern award, the minimum rates of pay set out in the applicable award.

ANNUALISED SALARIES TO BE REVIEWED

Usually employers who pay a salary or above award rates do so in satisfaction of other award entitlements that may otherwise be payable, such as overtime penalty rates or annual leave loading. With the increase to minimum wage and award rates, many employers may find they are no longer paying above award, or if they still are, not by as much.  In many cases, employers will need to increase their employees’ salaries or above award rates to avoid underpayments.

If your rates are no longer going to be above award, or if they still are but not by as much, consider whether or not you still pay enough to compensate for the award entitlements you are setting off. Additionally, if you do not have a set-off clause in an employee’s contract of employment you may be in breach of the applicable award and/or may not be able to rely on the higher rate should an employee challenge their entitlements.

We strongly recommend employers use this time before 1 July to:

• review and update staff contracts;
• undertake a current wage analysis and comparison for each employee in a standard pay cycle.  This involves comparing what an employee is paid compared to what they would otherwise receive under the applicable modern award; and
• increasing any rates of pay or salary that fall short of the minimum wage and award rates.

SUNDAY PENALTY RATE CUTS

The Fair Work Commission has confirmed reductions in Sunday penalty rates in the retail, pharmacy, hospitality and fast food industries will be phased in over a number of years, starting on 1 July 2017.  Employee union, United Voice have however indicated they would be appealing the Commission’s decision and are urging employers to maintain the current penalty rates under the applicable modern awards in light of their planned appeal. The new Sunday penalty rates from 1 July can be found below:

Fast Food Industry Award 2010

Full-time and part-time employees – Level 1 only

1 July 2017: 150% to 145%

1 July 2018: 145% to 135%

1 July 2019: 135% to 125%

Casual employees (inclusive of casual loading) – Level 1 only

1 July 2017: 175% to 170%

1 July 2018: 170% to 160%

1 July 2019: 160% to 150%

Hospitality Industry (General) Award 2010:

Full-time and part-time employees only

1 July 2017: 175% to 170%

1 July 2018: 170% to 160%

1 July 2019: 160% to 150%

General Retail Industry Award 2010:

Full-time and part-time employees

1 July 2017: 200% to 195%

1 July 2018: 195% to 180%

1 July 2019: 180% to 165%

1 July 2020: 165% to 150%

Casual employees (inclusive of casual loading)

1 July 2017: 200% to 195%

1 July 2018: 195% to 185%

1 July 2019: 185% to 175%

Pharmacy Industry Award 2010:

Full-time and part-time employees

1 July 2017: 200% to 195%

1 July 2018: 195% to 180%

1 July 2019: 180% to 165%

1 July 2020: 165% to 150%

Casual employees (inclusive of casual loading)

1 July 2017: 225% to 220%

1 July 2018: 220% to 205%

1 July 2019: 205% to 190%

1 July 2020: 190% to 175%

If you have any questions about your employees’ entitlements and pay rates from 1 July, contact the HR Law team for assistance.