Australia: Key Financial Threshold Changes for Australian Employers – Effective 1 July 2014

Labour, Employment and Workplace Safety Alert
Last Updated: 1 July 2014
Article by Belinda Copley and Richard Gunningham

A number of employment related financial thresholds are indexed annually. Below is a summary of some important changes effective 1 July 2014 and some compliance actions that employers should consider as the start of the 2014/2015 financial year approaches.

National Minimum Wage (Before Statutory Superannuation)*

2013/2014 Financial Year 2014/2015 Financial Year
AUD622.20 per week, or
AUD16.37 per hour
AUD640.90 per week, or
AUD16.87 per hour

Award Free Casual Loading*

2013/2014 Financial Year 2014/2015 Financial Year
24% 25%

High Income Threshold for Unfair Dismissal Applications

2013/2014 Financial Year 2014/2015 Financial Year
AUD129,300 AUD133,000

Award-free employees earning above the High Income Threshold are not eligible to bring an unfair dismissal claim.

High Income Threshold for Award Covered Employees

2013/2014 Financial Year 2014/2015 Financial Year
AUD129,300 AUD133,000

For Award covered employees, where an employer can guarantee that the employee will earn more than the high income threshold, the employer and employee may enter into a Guarantee of Annual Earnings excluding the employee from Award coverage.

Maximum Compensation for Unfair Dismissal Applications

2013/2014 Financial Year 2014/2015 Financial Year
AUD64,650 AUD66,500

Annual Superannuation Guarantee Contribution Rate Increase

Financial Year Superannuation Guarantee Charge (SGC) rate
2013/2014 9.25%
2014/2015 9.50%

The 2014/2015 Federal Budget confirmed the superannuation guarantee rate will continue to increase incrementally up to 12%, but it will do so over a deferred timeframe. The superannuation guarantee rate will remain at 9.5% until 30 June 2018 when it will re-commence incremental increases at a rate of 0.5% per year until it reaches 12%.

EOFY Audit

The end of financial year represents a timely opportunity for employers to conduct internal audits to ensure:

  • compliance with the new minimum statutory thresholds outlined above
  • compliance with the increased minimum rates and other monetary provisions under Modern Awards
  • that the business has in place the foundations it requires to adapt to any statutory changes, including the introduction of the Government Paid Parental Leave scheme on 1 July 2015.

Modern Award Compliance

Many employers relied upon the transitional provisions in the Modern Awards to phase in increased award entitlements over the past four years. The transitional provisions will cease on 30 June 2014, requiring employers to pass on the full Modern Award entitlements from 1 July 2014.

Accordingly, the end of the financial year should be used as an opportunity to check that, from 1 July 2014, employees will be paid at least the full award rates in relation to:

  • minimum wages
  • piecework rates
  • casual loadings
  • weekend, public holiday, evening or other penalty rates
  • shift allowances or penalties.

Modern Award Annualised Salaries

Employers paying employees annualised salaries in accordance with annualised salary clauses in Modern Awards (such as the Clerks – Private Sector Award 2010 and the Banking, Finance and Insurance Award 2010) are required to conduct annual reviews to ensure the salaries paid are sufficient having regard to the provisions of the Modern Award that are covered by the annual salary.

Employers should use the end of financial year, and introduction of new minimum Modern Award rates, as a catalyst for conducting an annual review.

Paid Parental Leave

The Government Paid Parental Leave Scheme (GPPL) is set to commence on 1 July 2015. While the finer details of the scheme are yet to be finalised, employers offering Employer Paid Parental Leave schemes (EPPL) should decide as part of finalising their 2014/2015 budgets and forecasting whether:

  1. The EPPL scheme will be retained despite the introduction of the GPPL scheme on 1 July 2015 (ie the two schemes will co-exist)
  2. The EPPL scheme will be removed entirely upon the introduction of the 26 week GPPL scheme or
  3. The EPPL scheme will be amended to supplement the GPPL scheme, for example by offering to only 'top up' employees who earn over AUD100,000 (inclusive of superannuation) and who are therefore ineligible to receive paid parental leave at their 'full replacement wage'.

Employers wishing to introduce changes to their EPPL schemes ahead of the commencement of the GPPL scheme on 1 July 2015 will need to ensure their contractual and policy documents provide sufficient flexibility to make such changes. Reasonable notice of changes to EPPL should also be provided, particularly given many employees are likely already arranging their affairs based on the assumed co-existence of the EPPL and GPPL schemes.

[*] The national minimum wage and casual loading rate is applicable to non-award covered employees and non-award casual employees. Please refer to the relevant Modern Award for the applicable rates for Award covered employees.

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.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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