What the start of the 2018/2019 financial year means for your business

The beginning of a new financial year brings with it many important changes to Australia’s workplace relations system. Changes to minimum wages, allowances, high income thresholds, penalty rates and the unfair dismissal remedies are just a few of the changes every business should be on top of!

These changes pose a significant risk to businesses who fail to adjust. Below we provide a brief snapshot of the key changes your business must keep in mind in the new financial year.

1. Increase to minimum wages and allowances.

From the first full pay period on or after 1 July 2018 rates of pay under all Modern Awards, along with the National Minimum Wage, have increased by 3.5%.

The National Minimum Wage for award free employees is now $18.93 per hour or $719.20 per week. The 25% casual loading has remained unchanged and applies to both award-covered and award-free employees.

Businesses with employees covered by Modern Awards must ensure they are now paying no less than the new minimum wages under their relevant awards. Significant penalties that can be imposed on those that underpay their employees. As such wages and salaries should be reviewed heading into the new financial as those that were award compliant last year may no longer meet the minimum requirements!

In addition, most award allowances such as meal allowances and first aid allowances will have increased. Businesses should check their relevant industry and occupational awards or seek professional advice if unsure about how these changes to minimum award entitlements affect them.

2. Increase
to high income threshold.

The Fair Work Commission also announced the high income threshold has increased as of 1 July 2018 from $142,000 to $145,400. This change is particularly important for the purpose of unfair dismissal.

An employee who has an annual rate of earnings above the high income threshold is not protected from unfair dismissal (unless the employee is covered by a modern award or agreement). As a result of the high income threshold increasing, this also means that the maximum financial compensation for unfair dismissal is now $72,700. Up from $71,000 last financial year.

3. Changes to penalty rates in Retail, Pharmacy and Hospitality Awards.

For businesses in the retail, pharmacy and hospitality industries, further reductions to Sunday penalty rates came into effect from 1 July 2018.

The extent of the changes depends on the industry, with Sunday penalty rates being reduced by 10 or 15%. Below we provide an overview of some of the changes to Sunday penalty rates:

  • General Retail Industry Award: An 80% loading for full time and part time employees (reduction of 15% from the 2017/2018 financial year) and 85% for casual employees (reduction of 10% from the 2017/2018 financial year) now applies.
  • Fast Food Industry Award: A 35% loading for full time and part time level 1 employees now applies on Sunday (reduction of 10% from the 2017/2018 financial year) and 60% loading for casual level 1 employees (reduction of 10% from the 2017/2018 financial year).
  • Pharmacy Industry Award: An 80% loading for full time and part time employees now applies (reduction of 15% from the 2017/2018 financial year) and 105% loading for casual employees (reduction of 15% from the 2017/2018 financial year).
  • Hospitality Industry Award 2010: A 60% loading for full time and part time employees (reduction of 10% from the 2017/2018 financial year), with the casual Sunday penalty rate remaining the same.

4. Civil penalties

The civil penalty values have remained unchanged for the 2018/2019 financial year and are as follows:

  • $63,000 for contraventions by corporations ($630, 000 for serious contraventions); and
  • $12,600 for individuals ($126,000 for serious contraventions).

Under the Fair Work Act 2009 civil penalties can be ordered for contraventions of the National Employment Standards, modern awards or enterprise agreements, which would include failure to pay minimum award entitlements.

Our workplace relations specialists at HR Assured are here to help you and your business remain complaint in the new financial year. If you are uncertain as to how these changes affect your business please contact our team for an informal chat today.