EOFT Human Resources Update
Minimum Wage Increase Announced for 2024/25
Today, the Fair Work Commission announced that the National Minimum Wage would increase by 3.75% from July 1, 2024. This increase will increase the hourly minimum wage to $24.10.
This increase will be effective from the first pay period after 1 July 2024. We highly recommend waiting until the new Award rates are updated for your Modern Award, as other changes can be made during Fair Work’s annual review. This is the best way to ensure you don’t miss anything relevant to your business.
This is a significant increase, so now is the time if you haven’t recently reviewed your employees’ salaries to ensure they still meet the minimum requirements.
This is the perfect time to check rates for employees who receive a flat hourly rate and to ensure they are still meeting the Better Off Overall Test (BOOT). Effective 1 January 2025, new amendments to the Fair Work Act will impose a penalty of up to 10 years’ imprisonment and fines of up to $7.8 million for employers (including individual Directors) that deliberately withhold payment of employee wage entitlements under the Act. This will apply Australia-wide.
Increase to Superannuation Guarantee
Effective 1 July 2024, employers must increase the minimum superannuation contribution to employees from 11% of “Ordinary Time Earnings” (OTE) to 11.5%.
Whether an employee’s salary is expressed as inclusive or exclusive of superannuation may decrease an employee’s take-home pay or increase the employer’s costs. Now is an excellent time to carefully review how this increase will affect your employees.
Is your remuneration inclusive or exclusive of superannuation?
Superannuation is often framed as an add-on to wages. Therefore, we say, “Your salary is $60,000 plus 11 % super”. Whenever we use the phrase “plus super, ” we say that remuneration excludes superannuation.
The benefit of structuring pay as exclusive of superannuation is that it makes it easy to compare the pay rates against Award rates, as Modern Awards rates are exclusive of superannuation. It also makes it much easier to implement an increase in superannuation.
Executives and professionals may sometimes have their wages expressed as including superannuation. For example, “The salary is $96,000 inclusive of super.” If their employment agreement clearly states that the package includes superannuation and that any increase in superannuation will be absorbed, their take-home pay will be reduced on 1 July 2024.
Consider the ‘real’ cost of reducing an employee’s pay
While you may legally be able to absorb the increase in superannuation into an employee’s salary, should you?
Reducing an employee’s take-home pay will impact their relationship with you. If employees feel like you are treating them as a cost, this can create a culture of ‘what’s in it for me‘. We recommend that you carefully consider how you manage this process so you don’t end up with unintended consequences, which may include turnover.
Retail Award Changes
The Fair Work Commission has changed the wording of the Retail Award concerning the pay rate for employees who don’t get a minimum break between shifts. These changes took effect from the first full pay period on or after 14 May 2024.
What’s changed?
Employees are entitled to a higher pay rate if they work a shift without a 12-hour break between their shifts (or 10 hours by agreement). All hours worked without this necessary break are paid at:
200% of their minimum hourly rate
225% of their minimum hourly rate if it’s a public holiday.
Casuals also get their casual loading calculated on their minimum hourly rate. Employees should receive this higher pay rate until they have the minimum break between shifts.
Casual Employees and Contractors
Changes to Casuals
Some changes to casual employment will be introduced on 26th August 2024 that employers need to be aware of. They include a new definition of casual employment, new guidelines around when to provide the Casual Employment Information Sheet, and a new process for casual employees converting their employment to a permanent position.
Changes to Contractors
Effective 26th August 2024, a new definition will be added to the Fair Work Act to help determine the meaning of ‘employee’ and ‘employer’.
To determine if a worker is an employee or an independent contractor, the following must be considered:
- the real substance, practical reality, and true nature of the working relationship. This also applies when determining whether a person is an employer or a principal for outworkers.
- This includes all parts of the working relationship between the parties, including the terms of the contract and how the contract is performed in practice. This is a change from the existing test, which focuses mainly on the terms of a contract.
Applying the new definition may:
- mean that some working relationships are characterised differently
- result in different rights and obligations for people affected.
This may occur where the terms of the written contract don’t align with other factors, such as how the contract is performed in practice.
The new definition won’t apply to some people. This includes someone who would only be in the national workplace relations system if they were employees or employers because their state referred their powers to make workplace laws to the Commonwealth.
The new definition also won’t affect the meaning of ‘employee’ and ‘employer’ in other existing laws defining employment. For example:
- tax
- superannuation
- workers compensation.
With all these changes coming into effect, now is the right time to review your Casual employees and Contractors to ensure they are still classified correctly and have not crept into a regular pattern of work that will put you at risk.
|
|||||||||||
