Mark Branagan and Liz Guarino

July 1 – In with the New – Latest Employment Rates Update

Mark Branagan and Liz Guarino

18 July 2017

Award Conditions Employment Contracts Enterprise Bargaining Industrial Relations

The new financial year has brought important changes to the national minimum wage, minimum wage rates in modern awards, penalty rates in select modern awards, the high income threshold for unfair dismissal access, high income guarantees and maximum civil penalties that employers should be aware of. Set out below is a summary of these changes which came into effect from 1 July 2017.

Minimum Wages

All employees in Australia must receive at least the national minimum wage. As at 1 July 2017, the national minimum wage increased by 3.3% from $672.70 per week to $694.90 per week, calculated on the basis of a 38 hour week; or from $17.70 per hour to $18.29 per hour.

Award-covered employees must receive at least the minimum rates set out in the applicable modern award, which will also increase from 1 July 2017 in line with the 3.3% increase to the national minimum wage.

If your employees are covered by an enterprise agreement, you should check that the rates of pay in the enterprise agreement are not less than the new minimum rates of pay under the relevant modern award.

Any failure to comply with the new minimum rates of pay may attract significant financial penalties. This is particularly the case since the Fair Work Ombudsman has recently been active in prosecuting businesses that have been found to be non-compliant with the applicable minimum rates of pay.

Unfair Dismissal

From 1 July 2017, the high income threshold for employees seeking access to the unfair dismissal regime increased from $138,900 to $142,000 per annum. As such, employees that earn more than $142,000 are not entitled to bring an unfair dismissal claim against their employer.

Please note that other sources of income such as car allowances and other benefits are included in the calculation of the annual rate of earnings for the purposes of the high income threshold.

The maximum amount of compensation that an employee may be awarded in an unfair dismissal case also increased from $69,450 to $71,000 (or 26 week’s pay, whichever is the lesser) for dismissals occurring on or after 1 July 2017.

High Income Guarantees

The new high income threshold of $142,000 per annum is also relevant to circumstances where employees are engaged on the basis of a high income guarantee. A high income guarantee is essentially where an employer and employee may agree in writing that a modern award will not cover that employee while they receive annual earnings that exceed the high income threshold (i.e. currently $142,000 per annum).

Maximum Civil Penalties

The maximum civil penalties for breaches of the Fair Work Act 2009 (Cth) (FW Act) have increased for contraventions which occur after 1 July 2017. For corporations, the maximum penalty increased from $54,000 to $63,000 per contravention. Whereas for individuals, the maximum penalty increased from $10,800 to $12,600 per contravention. A contravention of a civil remedy provision in the FW Act may include a breach of the following:

  • The National Employment Standards (NES);
  • The terms of a modern award or enterprise agreement;
  • Issues regarding the protection of workplace rights and other general protections; and
  • Protected and unprotected industrial action.

A summary of the abovementioned new rates are set out in the table below:

Changes to the minimum wage, high income threshold for unfair dismissal, high income guarantees and maximum civil penalties
Item Pre-1 July 2017 From 1 July 2017
Minimum wage $672.70 per week; or
$17.70 per hour
$694.90 per week; or
$18.29 per hour
Unfair dismissal income cap / High income guarantee $138,900 per annum $142,000 per annum
Maximum compensation award for unfair dismissal The lesser of:
$69,450; and
26 week’s pay,
for dismissals after 30 June 2016
The lesser of:
$71,000; and
26 week’s pay,
for dismissals after 30 June 2017
Maximum civil penalties $54,000 per contravention for corporations; and
$10,800 per contravention for individuals
$63,000 per contravention for corporations; and
$12,600 per contravention for individuals 

 

Changes to Penalty Rates in Select Modern Awards

The Fair Work Commission’s decision to reduce Sunday and Public Holiday penalty rates in certain modern awards has implications for employers from 1 July 2017.

Public Holiday Penalty Rates

The changes to the public holiday penalty rates of pay in the Retail, Hospitality, Restaurant, Fast Food and Pharmacy Awards are set out below. Unlike the Sunday penalty rates, there are no transitional arrangements to the reduction of the public holiday penalty rates which were reduced with full effect from 1 July 2017.

Changes to Penalty Rates – Public Holiday Rates of Pay
  Pre-July 2017 From 1 July 2017
Award Full time and part-time employees Casual employees (inclusive of casual loading) Full time and part-time employees Casual employees (inclusive of casual loading)
General Retail Industry Award 2010 250% 275% 225% 250%
Hospitality Industry (General) Award 2010 250% 275% 225% 250%
Restaurant Industry Award 2010 250% 250% 225% 250% (no change)
Fast Food Industry Award 2010 250% 275% 225% 250%
Pharmacy Industry Award 2010 250% 275% 225% 250%

Sunday Penalty Rates

In relation to the Sunday penalty rates, the reductions to the Sunday penalties in the Retail, Fast Food, Hospitality and Pharmacy Awards will be phased in from 1 July each year over the next 3-4 years. The changes which took effect from 1 July 2017 are set out below.

Changes to Penalty Rates – Sunday Rates of Pay
  Pre-July 2017 From 1 July 2017
Award Full time and part-time employees Casual employees (inclusive of casual loading) Full time and part-time employees Casual employees (inclusive of casual loading)
Hospitality Industry (General) Award 2010 175% 175% 170% 175% (no change)
Fast Food Industry Award 2010 150% 175% 145% 170% (Level 1 employees only)
General Retail Industry Award 2010 200% 200% 195% 195%
Pharmacy Industry Award 2010 200% 225% 195% 200%

Should you have any queries with the new rates for this financial year, please do not hesitate to contact our Employment and Safety Team.