Amid the rush of the end of the financial year, there are multiple changes that employers need to be aware of commencing on 1 July 2022. Following their annual review, the Fair Work Commission (the "FWC") has made a number of changes, including changes to the national minimum wage, modern award rate and high income threshold.

There are also changes to the superannuation guarantee rate and superannuation guarantee threshold which will come into effect on 1 July 2022.

National minimum wage and modern award rate

The FWC's wage panel is required to review annually the national minimum wage and modern award rates. As of 1 July 2022, the national minimum wage will increase by 5.2% to $812.60 per week ($21.38 per hour). This higher national minimum wage will apply from the first full pay period on or after 1 July 2022.

The minimum modern award rates will also increase by 4.6%, subject to a minimum increase of $40 per week based on a 38-hour week for a full-time employee. With the exception of some modern awards in the aviation, hospitality and tourism industries, the increased rate will be effective from 1 July 2022.

Superannuation guarantee rate and threshold

The superannuation contribution rate is also set to increase from 1 July 2022. The rate is progressively increasing annually by 0.5% until July 2025 when the rate will reach 12%. Employees who are eligible to receive the superannuation guarantee, can expect an increase from 10% to 10.5%. This higher rate must be used to calculate superannuation payments from 1 July 2022.

The impact of this will depend on the structure of an individual employee's remuneration package and employment contract. For employees who are paid a base amount plus superannuation it will result in an increase in their overall pay. Alternatively, employees who are paid an amount inclusive of superannuation will see a decrease in their take home pay.

The $450 monthly eligibility threshold is also being abolished, meaning that employees can be eligible for superannuation payments regardless of how much they earn. This means that any employee above the age of 18 who works more than 30 hours per week is entitled to superannuation contributions of 10.5%, irrespective of how much they earn. This change was included in the 2021 federal budget in an effort to improve the equality of the superannuation system.

High income threshold

From 1 July 2022 the high income threshold will increase from $158,500 to $162,000. This means that employees who earn more than $162,000 will not be eligible to bring an unfair dismissal claim unless they are covered by a modern award.

The maximum amount of compensation that can be awarded by the FWC in an unfair dismissal claim will also increase to $81,000.

What should you do as an employer to ensure compliance?

  • Review the rate of pay or salary for employees to ensure they are being paid at least the national minimum wage or modern award rate.
  • Apply the increased superannuation guarantee rate and ensure it is being paid to all eligible employees regardless of how much they earn.
  • Take appropriate steps to ensure employees are not underpaid. If you have underpaid an employee, read our article about what you should do here.