Wage & Super Changes
19th May 2021
National Minimum Wage
Each year the Fair Work Commission conducts an annual wage review during March and June. Any changes to the national minimum wage have flow on effects to employees and employers in the national workplace relations system, with wages rates in Modern Awards (and other industrial instruments) typically being increased from the first full pay period on or after 1 July.
Last year however, due to economic impacts of COVID-19, the FWC introduced a staggered approach to wage increases for each of the modern awards. Wages contained in the Health Professional and Support Services Award and Nurses Award were part of the Group 1 increases which took effect from 1 July 2020, whereas the minimum wage rates in the General Retail Industry Award increased effective from 1 February 2021.
It is unclear at this time whether the FWC will increase rates, and if they do, whether they will take the same rolling implementation, or revert to the traditional 1 July effective date for all modern awards and sectors.
What we do know is that the unions are calling for a 3.5% increase to the minimum wage, which is more than double the broader wage growth. If granted, this would push the national minimum wage for a permanent employee (full time and part time) to $20.53 an hour, which equates to a $26.38 a week increase for a full-time minimum-wage worker.
Employer groups and the Federal Government have urged the FWC to take a cautious approach when considering its decision to raising the minimum wage given business financial stresses and uncertainties in the domestic and international economic outlook.
HIES is keeping a close eye on the wage review process and will update its members when the FWC releases its national minimum wage decision. Where a wage increase is ordered, members will be provided with updated wages summaries.
Super Increases to 10%
From 1 July 2021, the superannuation guarantee will increase to 10% and then gradually to 12% by 2025.
Take some time between now and EOFY to review your employee contracts to determine whether the increased employer contribution to super is payable in addition to the employee’s wages, or if it can be absorbed into the employee’s base salary.
An example of an employment contract clause allowing businesses to absorb the super increase and therefore decrease the impacted employee’s base salary by 0.5% is as follows:
“Any increase in the legislated minimum superannuation contribution will not result in an increase in your total Remuneration package, and may result in a decrease in your base salary.”
Superannuation Minimum Income Threshold to be abolished
As part of the Federal Government’s recent budget announcements, it was declared that from 1 July 2022, the current $450 per month minimum income threshold, whereby employees do not have to be paid the superannuation guarantee (SG) by their employer, will be removed.
This change is being made in a bid to improve equality in the superannuation system as majority of workers who earn less than this monthly amount are women. The practical impact for employers and practices is that from next year they will need to make SG payments for more employees.