When the Fair Work Commission announced that the minimum wage will increase from 1 July 2022, Australian employers would’ve been the first to wonder how it will affect businesses, and what they need to do to comply with the changes.
The Commission delivered workers a 5.2% pay rise, slightly above headline inflation, which puts an extra $40 a week in the pockets of full-time employees on the minimum wage. The decision will affect more than 2.7 million workers and employees on enterprise agreements and other pay settings.
As employment lawyers at BlueRock, we specialise in assisting SME business owners with a range of legal services, including workplace rights and obligations under the Fair Work Act, employment contracts, enterprise agreements or modern award wages. In light of the new wage rises, we encourage all Australian employers (or overseas companies with local staff) to review their employees’ wages to ensure they meet the new minimums.
It’s important for employers to note that the minimum rate of pay is in addition to the other award entitlements, such as loading and allowances. Significant penalties can be imposed in the event of underpayment, even if the underpayment is unintentional.
Underpayment of wages also impacts the relationship between employer and employees as well as generating adverse publicity which can impact the employer’s brand, good will and place within the market.
How Can Employers Ensure They Get Payroll and Award Rates Right?
If you run a business with employees on the payroll, we understand these changes can be daunting and confusing. We’ve shared some advice below to help ensure you aren’t underpaying or overcompensating your staff with the new increased wages.
Get To Know The National Employment Standards
The National Employment Standards (NES) make up 11 minimum entitlements for employees in Australia. An award, employment contract, enterprise agreement or other registered agreement can't provide for conditions that are less than the national minimum wage or the NES. As an employer, you should be providing every new employee with a copy of the Fair Work Information Statement when they start their new job. Every casual employee also needs to be given a copy of the Casual Employment Information Statement when they start working for you.
Use The Fair Work Ombudsman’s Pay Calculator
We’ve seen some very public cases of wage theft play out in the media over the last few years, which is a nightmare scenario for most business owners who want to do the right thing by their people. To help ensure you understand how much each employee is entitled to be paid, the Fair Work Ombudsman puts a significant focus on working with employers to ensure obligations are clear and understood.
To help you get it right, make use of the PACT (Pay and Conditions Tool) to calculate employees’ wages, penalty rates and allowances.
Understand Enterprise Agreements and All-Inclusive Salaries
If your employees are covered by an enterprise agreement, ensure that the base rates of pay provided are at least equivalent to the new minimum rates of pay for the applicable award or the minimum wage order. Employers who use ‘all-inclusive’ salaries (such as via set-off clauses in their employment contracts or by using annualised salary arrangements) need to ensure that the salary “buffer” is sufficient to cover off all of the employees’ minimum entitlements each pay period, taking into account the increase to the minimum wage.
Unsure About The 2022 Award Rate Wage Rises?
Legislation around employment and fair work regulations is constantly evolving. We know it can be challenging to stay up to date on all your employment obligations when you’re busy focusing on running your business. BlueRock’s employment lawyers and payroll experts specialise in staying across these award rate changes and will give you the right advice to ensure you remain compliant. Talk to a BlueRock employment lawyer today and ensure you meet the new minimums for your employees as the wage rises come into play.