This article outlines key changes to wages, super, the high income threshold and parental leave from 1 July 2023 and provides guidance for employers in responding to the changes.
How much is the increase to wages?
As we have all heard, the Fair Work Commission announced an increase to the National Minimum Wage by 5.75% on 2 June 2023. The National Minimum Wage applies to employees who are not covered by an award or registered agreement. The increase will apply to an employee’s first full pay period starting on or after 1 July 2023. The new National Minimum Wage is $23.23 per hour or $882.80 per week.
The National Award Minimum Wage has also increased by 5.75%. This will directly impact annualised wage agreements which must leave employees better off overall. Updated calculations will need to be undertaken to ensure the annualised wage is compliant with the new National Award Minimum Wage.
How much is the super increase?
In addition to the above, from 1 July 2023 employers now need to ensure that they are paying their employees the super guarantee rate of 11%, which has increased from 10.5%. Super is payable for all eligible employees regardless of how much they earn. Super contributions for the quarter ending on 30 June 2023 are still calculated at 10.5%. Employers can check how much super they need to pay their employees by using the “super guarantee contributions calculator” which is available on the ATO website here: https://www.ato.gov.au/Business/Small-business-newsroom/Lodging-and-paying/The-super-guarantee-rate-is-increasing/
How much is the high income threshold?
The high-income threshold acts as a limit on who is protected from unfair dismissal. If an employee is not covered by an award or registered agreement, then they must have an annual rate of earnings of less than the high-income threshold to be eligible for an unfair dismissal remedy. From 1 July 2023, the high-income threshold will be $167,500.00.
Changes to parental leave
From 1 July 2023, parental leave will become a combined 20-week paid leave scheme for partnered couples. The former Dad and Partner Pay has been removed. Single parents will be able to access 20 weeks of leave, increasing from 18 weeks.
Tips for employers
In light of the above changes, we recommend that employers do the following:
- Review any annualised wage agreements to ensure that employees are still “better off overall” with the increase in wages
- Review all enterprise agreements that apply to an employee to ensure that employees are still “better off overall” with the increase in wages
- Undertake payroll audits to ensure super is paid at the higher rate
- Consider whether employees on an all-inclusive annual salary are receiving more than the National Minimum Wage
- Consider the higher business costs in annual salary reviews
- Review and update parental leave policies in accordance with legislative change
- Consult with all effected employees about the changes and seek to ensure they understand their minimum rights and entitlements
The Dispute Resolution team at Dobson Mitchell Allport can assist with any of the above matters and employment matters generally.