It is a constant challenge for employers to remain up date with
changes in the dynamic environment of employment law. This article
looks at a number of important changes in this area which came into
effect on 1 July 2016.
As well as increases to minimum wages and the "high
income threshold" there is now a new Fair Work
Information Statement that must be provided to new employees
– a fact that has not been widely publicised.
Increase to minimum wage rates under modern awards,
enterprise agreements and for award-free employees
From the 1 July 2016 the minimum hourly and weekly pay rates
under modern awards have increased by 2.4%.
Employers should check that rates of pay of employees covered by
modern awards do not fall below the new minimum rates set out in
the modern awards.
Employers with enterprise agreements should note that the
Fair Work Act 2009 stipulates that an employee's base
rate of pay can never be below that which it would be if the
employee were instead covered by an applicable modern award, so
employers may wish to review current levels of remuneration in
It sometimes forgotten that for award-free employees there is
also a minimum wage. For employees of 21 years or over this figure
has now risen to $17.70 per hour, up from $17.29.
Junior employees (those 20 years of younger) are entitled to a
percentage of this figure, set on a sliding scale, dependent on
their age. Details are available on the Fair Work
The above changes are effective from the first full pay period
after 1 July 2016.
Employers should note that there is usually no obligation on
them to increase employees' pay rates if they are already equal
to or greater than the new minimum wage or award rates as the case
may be (subject to any relevant terms in a contract of employment
or an enterprise agreement).
A change to the high income threshold
The rules that determine whether an employee is entitled to
bring a claim for unfair dismissal under the Fair Work
Act 2009 state that they may only do so, where their annual
earnings are less than the "high income
threshold" prescribed by regulations from time to time
unless a modern award or an enterprise agreement
applies to the employee's employment (in which case their
earnings are not relevant).
Whether an employee has a potential remedy for unfair dismissal
may significantly impact on an employer's ability to dismiss an
employee and the potential risks of doing so (and the process it
must follow to dismiss the employee).
From 1 July 2016, the high income threshold has risen from
$136,700 to $138,900. This also has an impact on
the maximum compensation that can be awarded for an unfair
dismissal claim. This is calculated on half of the high income
threshold or 6 months' of an employee's salary, whichever
is the lesser figure.
This means that the maximum award of damages for unfair
dismissal cases (where reinstatement is not ordered) is now
$69,450 (up from $68,350).
In calculating an employee's earnings for the purpose of the
ascertaining whether they fall below the high income threshold,
compulsory superannuation contributions are not included nor are
non-guaranteed earnings such as overtime, commission or
Non-monetary benefits may be included, such as
the value attached to the use of a company car for personal
A new Fair Work Information Statement
Section 125 of the Fair Work Act 2009 provides that
employers must give all new employees a copy of the Fair Work
Information Statement as published by the Fair Work
Ombudsman before they start employment or as soon as
practicable after their employment commences.
The statement provides employees with information on their
rights under the Fair Work Act 2009.
The Ombudsman has recently published a new Fair Work
Information Statement (which deals with the increase to the
high income threshold) and employers should ensure that they issue
the current statement to new employees.
Failure to give employees the correct statement would
technically be a breach of a civil remedy
provision under the Fair Work Act 2009 for which an
employer could face a fine – up to $54,000 for a corporation
and $10,800 for an individual (ie director or HR Manager).
Employers will be glad to note that maximum penalties are one
thing that has not increased from 1 July 2016!
When employees engage in out-of-hours misconduct, it can negatively affect the reputation of the employer.
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