As usual with the start of a new financial year, there are a
number of increases affecting minimum rates and allowances, high
income thresholds and superannuation contribution bases. These
increases are either the result of annual indexing or have been
increased by Fair Work Australia ('FWA')
in its annual wage review.
Increases to modern award pay rates and Allowances
On June 3 2011, FWA handed down its Annual Wage Review Decision
for 2010 / 2011. The resulting increases apply from the first full
pay period on or after 1 July 2011. This decision increased rates
of pay in Modern Awards and pre-reform pay scales by 3.4%.
Reimbursement allowances in Modern Awards will also increase
according to the increase in the relevant consumer price index
component and other allowances will increased by 3.4%.
FWA has also increased the national minimum wage to $589.30 per
week, calculated on the basis of a week of 38 ordinary hours, or
$15.51 per hour and the casual loading for award / agreement free
employees is now 22%.
Employers should note that due to phasing in as part of the
transitional provisions in modern awards the actual increase to
minimum rates and allowances payable to employees may not be 3.4%.
For employers transitioning from a NAPSA or previous award where
such monetary entitlements were higher / lower than the modern
award rate the transitional amount will be added or subtracted.
These adjustments also take effect on or after 1 July 2011.
Penalties and loadings (including casual loadings) in modern awards
are also subject to transitional provisions and will increase or
decrease by 20% of the transitional percentage from the first full
pay period on or after 1 July 2011.
Following its decision, FWA has issued orders updating each
modern award with the new rate. Employers covered by awards should
review these rates and allowances to ensure they are paying their
employees correctly and are meeting their obligations under the
Fair Work Act 2009 ('FWA
High income thresholds increased
From 1 July 2011 the high income threshold increases from
$113,800 per annum to $118,100 per annum. This means that from 1
July employees who are not covered by an award or agreement and
earn in excess of $118,100 and who are terminated from their
employment will be excluded from the unfair dismissal provisions in
the FWA Act.
A modern award covered employee with guaranteed annual earnings
above the high income threshold can also be excluded from the
provisions of the applicable modern award that would otherwise
apply following written notification by their employer.
Accordingly, employers should check that employees for whom they
have previously utilised such exclusions have guaranteed annual
earnings above $118,100 to avoid any uncertainty regarding the
application of the modern award provisions to their employment
Paid parental leave scheme increases
From the first full pay period on or after 1 July 2011 the
national minimum wage paid under the national paid parental leave
scheme increases to $589.30. Under this scheme working mothers who
have been employed for at least 12 months prior to the birth or
adoption of a child will be entitled to 18 weeks pay at this rate.
The scheme is government funded, however, from 1 July 2011 the
employer will pay the money to the employee and be reimbursed by
the Family Assistance Office.
Implications for employers
Following the 1 July changes, employers should ensure they make
any necessary adjustments to payroll and affected employment
conditions of their employees to ensure they are meeting their
obligations under the FWA Act.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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