A new financial year is always a busy time for many payroll and human resources teams. It’s a time when performance and commission reviews might be due, salaries can increase and award rate changes need not only to be interpreted, but also implemented. The deadline of “the first full pay period on or after 1 July 2019” is a phrase which instills fear into many Australian workforce managers.
In June this year the Fair Work Commission (FWC) published its Annual Wage Review. The Fair Work Act 2009 (Cth) requires the Commission to review the National Minimum Wage and Modern Award minimum wages each financial year. The outcome of these reviews impacts all Australians employed under an Award, and flows on to many others. The 2017-2018 review estimated that “the number of employees who have their pay set by an award is estimated to be 2.3 million or 22.7 per cent of all employees”.
Any Modern Award minimum wage increase also impacts loadings, penalties, allowances and overtime payments which are calculated with reference to the Modern Award minimum wages. Similarly each 1 July there is a change to the high-income threshold for unfair dismissal applications. The high-income threshold for unfair dismissal applications will rise on 1 July 2019 from $145,400 to $148,700.
Over the past 6 years, we have also seen 1 July as a key date in a phased increasing of the superannuation guarantee. However this year this rate remains steady at 9.5%.
Under the Modern Award system, the wages for each classification are the lowest possible wage rate an employee can be paid. This means an employer cannot pay anything less than the minimum wage outlined the Award which applies. Often organisations make a decision to pay above the minimum wage rate. However, over time this can too easily become an underpayments issue. Any increases to the award wage, loadings, penalties and allowances each year need to be taken into consideration to ensure the employee doesn’t inadvertently fall below the minimum wage.
There is no doubt that the Australian wage system can be complex. Navigating your way through the National Employment Standards, National Minimum Wage, Modern Awards, Enterprise Agreements and contracting arrangements can often be described as a Pandora’s box. We see reminders of where things go wrong in the media regularly, with big business and household names being warned recently by the Fair Work Ombudsman Sandra Parker announcing that they would be taking a tougher approach to enforcement. Just this week it’s been reported that Domino’s Pizza have been the subject of a class action accusing them of misleading and deceptive conduct which alleges that it caused franchise operators to underpay thousands of “award workers” under old, substandard agreements as opposed to the Fast Food Industry Award. It’s estimated that if successful, the class action could cost Domino’s Pizza more than $240 million, a very expensive Pandora’s box in this instance.
As specialist employment lawyers, we often see the cost to an organisation of underpayment issues, often the result of inattention or human error. And the cost isn’t limited to repayment of wages, but often incurs legal fees, sometimes fines and bad publicity. Not to mention the productivity, cultural and morale issues that often remain with the workforce affected. We work with many clients from a risk management perspective to prevent these issues from impacting their business.
The information in this article is for information purposes only and does not constitute legal advice. You should obtain specific advice relevant to your circumstances.