In addition to the increase to minimum wages announced around 1 July each year, this year employers also need to take into account the increase to the superannuation guarantee contribution rate and a new set of wage theft laws in Victoria.
Below is a brief snapshot of things that employers need to consider before the end of the financial year.
Superannuation rate increases to 10% - what do your employment contracts say?
Employers have been aware of the scheduled increase to the superannuation guarantee contribution rate from 9.5% to 10% for some time now.
However, not all employers will have an obligation to increase employees' salary packages as a result of the rate increase.
For instance, some employment contracts provide for a 'total cost' salary package which is inclusive of an annual salary and superannuation contributions, and which expressly allows for a reduction in salary so that the 'total cost' of the package is not affected.
Of course, employers will need to ensure that such a reduction does not cause an employee's salary to fall below their minimum entitlements at law.
Also, given that there will be further increases to the superannuation guarantee contribution rate over the coming years until it reaches 12%, employers who do not have contracts that provide for a 'total cost' salary package and who wish to limit the effect of future increases on their bottom line should consider whether they need to update their template contracts going forward.
Minimum wage increases by 2.5% - but not all come into effect on 1 July 2021
The Fair Work Commission has announced a 2.5% increase to minimum wages, including modern award wages.
The increase means that the national minimum wage will increase to $772.60 per week or $20.33 per hour – an increase of $18.80 per week.
Like it did in the 2020/2021 financial year, the Fair Work Commission has again decided that there are exceptional circumstances to justify a delay in some industries.
For instance, the increase to the minimum rates in the General Retail Industry Award 2020 will not take effect until 1 September 2021 and minimum rates in the following modern awards will be delayed until 1 November 2021:
Employers will need to start reviewing employee wages to ensure they are ready to comply with the increased rates from 1 July, or alternatively, identify whether the wage increase in their industry has been delayed.
Wage Theft and the Wage Inspectorate Victoria
Victorian employers will soon have an additional reason to ensure that they are compliant with minimum wage obligations to employees. From 1 July 2021, the Wage Inspectorate Victoria will be responsible for investigating and enforcing Victoria's new wage theft laws.
Victoria's new Wage Theft Act will make it unlawful for employers to engage in a range of conduct, including:
- dishonestly underpaying or withholding employee entitlements including wages, leave and superannuation; and
- falsifying employee records, or dishonestly failing to keep employee records.
Employers that breach the new laws may face fines of up to $991,320 for corporations, or $198,264 or up to 10 years' jail for individuals.
The new laws will sit parallel to existing laws under the Fair Work Act which also make it unlawful to underpay employees.
Given the added incentive to ensure that Victorian employers are compliant with obligations to pay employee entitlements, please ensure that you contact the Madgwicks Workplace Relations and Safety team with any relevant queries.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.