On Friday 19 June 2020, the Fair Work Commission announced its decision in the 2019-2020 Annual Wage Review.
That decision was to increase the National Minimum Wage and modern award minimum rates of pay by 1.75% but, unusually this year, with three different operative dates for different industries based on their view on the impact of COVID-19 on different industry sectors.
The National Minimum Wage increases from
The effective dates are:
1 July 2020: National Minimum Wage & Award Group 1 (mainly health and community services, children’s services and aged care, emergency services, cleaning services, non-tertiary education and public service sectors)
1 November 2020: Award Group 2 (most awards including common ones like clerical, building and trades, manufacturing, graphic arts, gardening, farming, transport and distribution, professional services, mining and quarrying, tertiary education)
1 February 2021: Award Group 3: (mainly retail, hospitality, food services, events, recreation and entertainment, personal services such as fitness, hair dressing and dry cleaning)
The new rates are payable from the commencement of the first full pay period occurring on or after the relevant operative date.
For employers, the different scenarios that can apply are:
If you have employees who are covered by a modern award and you otherwise apply all of the terms and conditions of the award, you must ensure that employees are paid at least the award rate for their classification as adjusted for this decision.
If you have employees who are award free and not covered by an enterprise agreement, you must ensure that they are paid at least the National Minimum Wage as adjusted for this decision.
If you have employees who are covered by an award and you pay them on an annualized wage basis or on a salary or all purpose rate which sets off certain monetary employment conditions such as annual leave loading, overtime and shift loadings, penalty payments and allowances, you need to recalculate the rate of pay to ensure that the employee remains better off overall against award entitlements and comply with any award provisions that might apply to annualized wage arrangement.
If you have employees who are covered by an enterprise agreement which provides for annual adjustment of wages in line with Annual wage Review decisions of the Fair Work Commission, you need to adjust wages by 1.75% from the operative date for the relevant award.
If you have employees who are covered by an enterprise agreement but the agreement does not provide for annual adjustment as per 4., you need to ensure that wages paid are at least equal to those applying to the underpinning modern awards or the National Minimum Wage as applicable from the relevant operative date.
You need also to have regard to any provisions in employment contracts which might provide an obligation to pass on any increases separate from or additional to any of the above scenarios.
Please also note that, the ongoing modern award review process has resulted in a number of changes to modern awards (including, in some cases, changes to the calculation of minimum wages and also changes to the calculation of annualized wages) since the last Annual Wage Review.
This likely also means that you will need to review your employment contracts, something that we recommend that you do at least once a year in any case.
The Fair Work Ombudsman has a Pay Calculator Tool on its website and also publishes Pay Guides for each award – these provide detailed advice on ordinary time and overtime and penalty rates for each classification in the relevant award. You can access these resources at https://www.fairwork.gov.au/pay/minimum-wages/pay-guides.
If you need assistance in understanding and applying the effects of this decision in your business, we are happy to assist. We offer a free initial phone consultation if this is of interest to you.
The Victorian Parliament recently passed the Wage Theft Bill 2020 which is expected to take effect by no later than 1 July 2021 (ie sometime in the next 12 months).
Should you be worried about that?
The odds are that, if you are reading our blogs, you are compliant or you want to ensure that you are compliant with your wage obligations as an employer.
If that is the case, don’t worry about the Wage Theft legislation – celebrate it! Yes, that’s right – PARTY!!!
We all know that there are unscrupulous businesses out there who deliberately rip workers off – they are the ones that this legislation is targeted at and they deserve it.
Don’t forget that they are also unfairly gaining a commercial advantage over the business owners who are doing the right thing……..like you!
We know that there have been quite a few celebrated cases of wage underpayments involving celebrities and household name corporates.
Some of those probably did know that they were not compliant but thought they wouldn’t be caught.
Some probably got adventurous legal advice that sounded good but was really ill advised.
Others may well have had their own HR staff but Fair Work/workplace relations is a very complex field requiring specialist knowledge which is not as common as you might think among HR Practitioners.
Many of those exposed businesses have learned their lessons – the hard way – and many remain under the watchful eye of the Fair Work Ombudsman via undertakings and reporting requirements. So even they are unlikely to be really troubled by this new Wage Theft legislation.
So let’s just be clear on what do you need to do to be doing the right thing (if you are not already doing it) and not have to worry about this legislation:
Ensure that you understand and meet your obligations to your employees under legislation, regulations and modern awards
Have clear and compliant employment agreements that set out clearly what the wages and employment conditions are and which reference any relevant modern award and/or enterprise agreement
Maintain all required employment records accurately and up to date and
Have access to competent professional advice on Fair Work compliance and other workplace relations/HRM matters
You tick those 4 boxes and you are not likely to have any worries about compliance. We can help you with that.
Now, as for the bad guys, this is what the Wage Theft legislation means for them.
The offences (in general terms) are:
Dishonestly withholding at least part of an employee entitlement; or
Falsifying an employee entitlement record to dishonestly obtain or cover up a financial advantage; or
Failing to keep an employee entitlement record to dishonestly obtain or cover up a financial advantage;
Offences can attract penalties of up to $991,320 for bodies corporate and 10 years’ jail for individuals.
A Victorian Wage Inspectorate with wide ranging inspection and enforcement powers is to be established with its own Commissioner.
If you haven’t the benefit of professional advice on your workplace relations compliance situation or you just want to make sure, you might want to take advantage of our Lockdown Special Offer on a Fair Work Compliance Assessment. Check it out.
Are you on top of the new annualised wage obligations?
From 1 March 2020, new annualised wage provisions came into operation in many modern awards. They imposed new and significant obligations on employers which in many cases will not be welcomed by employees. For example, you are required to ensure that your employees record their starting and finishing times and their lunch breaks even if that is counter to your workplace value of trusting your people to do the right thing or something that you do not see as appropriate in your professional office.
The good news is that the Fair Work Commission has left the door open if you want to take an alternative approach via a common law contract. Here is what it said: “Employers may, pursuant to private contractual arrangements, pay employees in accordance with a salary arrangement that compensates for or “buys out” identified award entitlements without engaging with the annualised wage arrangements provision in the applicable award.”
Of course, you still need to ensure that your employees are better off overall than they would be if they were paid strictly in accordance with all award conditions (not just the minimum rates). If that is true in your case and there is no potential for your employee’s annualised salary (whether expressed as a fixed annual or weekly or fortnightly or monthly amount) to fall below that total award entitlement, properly drafted set off clauses in your employment contracts will enable you to legally avoid “engaging with the annualised wage arrangements provision in the applicable award.”
We can help you with that at a very affordable price – just $250 plus GST per contract. Of course, we will need you to show us that you are not in danger of underpaying people against award entitlements first – after all, we don’t want to be an accessory to an underpayment of wages.
If you want to engage us to assist with this, contact us here or call Peter Maguire on 0438 533 311.
CONTACT US
Ridgeline Human Resources Pty Ltd Abn : 24 091 644 094
