Australian Minimum Wage Update 2017
It’s been a big year for Australian employers, with changes to penalty rates, compliance crack downs by Fair Work, and shake ups in the world of big business Enterprise Agreements.
As the End of Financial Year quickly approaches business owners and employers need to start thinking about minimum wage updates and staff pay rates for the New Financial Year.
Fair Work has today announced its decision on national employment standards for 2017, including wage increases for Modern Award rates. As of July 1 2017, the national minimum wage will be increased by 3.3%, resulting in a minimum hourly rate of $18.29.
This is the first time in awhile that there has been minimum wage increase of more than 3%, and marks the second highest increase to the minimum wage since the introduction of the Modern Award system, with the highest increase occurring in 2011 at 3.4%.
This comes only a day after the Fair Work Commission released its Transitional Arrangements for Sunday penalty rates, which will see penalty rate changes implemented from July 1 2017, for specific employees under the Fast Food, Retail, Hospitality, and Pharmacy Award.
Changes to Public Holiday penalty rates will also come into effect July 1 2017, for specific employees under the Hospitality, Restaurant, Retail, Fast Food and Pharmacy Award.
What does this mean for you?
The national employment standards are set by Fair Work, and constitute the minimum legal wage and entitlements that employees are entitled to. As a business owner it is your responsibility to ensure that you are aware of wage rate changes, how they apply to your Modern Award or Enterprise Agreement, and that your employee wage rates have been updated accordingly prior to July 1 2017.
For employers with employees under the Fast Food, Retail, Hospitality, Pharmacy, and Restaurant Award, additional care must be taken to account for the changes to Sunday and Public Holiday penalty rates. Employers should check that they have applied the new updated wage rates to the correct employees.
Under the Fast Food Award, Sunday penalty rate changes will be staggered over the next three years, and will only be applied to Level 1, full-time, part-time and casual employees under the Award.
While only full-time and part-time employees under the Hospitality Award will be affected by transitional arrangements.
For more information on the Transitional Arrangements to Penalty Rates please visit the Fair Work Commission website.
Employers with Custom Agreements
For employers who have a custom agreement, pay above Award or have an Enterprise Agreement, it is your responsibility to conduct a ‘Better Off Overall Test’ (BOOT). This will confirm that your employees are better off under your custom agreement, than under the industry Modern Award.
Navigating the wage rate update mine field
Australia is regularly considered one the most complex countries to process payroll in, due to the complex and extensive regulations around labour in Australia. As such, it is no surprise that some Australian employers have struggled to keep up with the complex intricacies that are often associated with Modern Awards and wage rates as they change and update over the years.
However, failing to update wage rates correctly poses significant risk for business owners who risk breaching Fair Work regulations. It is therefore important that business owners and employers have the correct tools on hand to manage wage rate updates, Better Off Overall Test logistics, and compliance requirements.
How can Tanda help?
Implementing an automated workforce management system like Tanda, provides business owners and employers with the peace of mind in managing payroll compliance. In addition to streamlining rostering and timesheets, Tanda automates Award Interpretation including Award management.
The market-leading award interpreter automatically calculates the gross wage for your staff based on your industry Award and additional factors such as penalty rates, overtime and allowances. Tanda then takes this information and transfers it into your payroll software, in a format that is ready to be processed, so you can pay your staff quickly and effectively.
The best part about all of it- is that Tanda automatically updates Modern Award pay rates each year for you, in accordance with Fair Work’s wage updates. Tanda stores all your records securely in the cloud to meet your compliance expectations, but it also takes the stress out of your EOFY paperwork.
Contact one of Tanda’s friendly Business Managers for more information on how Tanda can automate your wage rates updates this Financial Year, on 1300 859 117 or via email at email@example.com.
For more information on Fair Work’s 2017 wage updates, please visit the Fair Work website.
While Tanda works to alleviate the hassle of wage rate updates through its automatic updates, the responsibility to confirm that wage rates are correct still rests with the employer.
Awards & Rostering | read
Easter is coming! What you need to know about paying your staff
Easter is coming up soon, and that means two things! A new season of Game of Thrones to feast on, and – perhaps less excitingly – public holiday rates to pay staff. As a business owner, accountant, or bookkeeper, it’s important to be aware of how public holiday rates over Easter and ANZAC Day should be paid in your state. First, let’s see when the holidays will be in 2014. You might be surprised! If your business is open on any of these public holidays, you’ll need to pay staff the appropriate public holiday rates. You should check your award, which will tell you exactly what multiplier or penalties to apply, often under a Public Holidays section. A common multiplier is 2.5x. Some businesses pay staff salaries, or pay casually “above award”. Public holiday penalties still apply! If you have a contract, it should cover this – check with Fair Work if you are unsure. Staff who don’t work on a public holiday If you have full or part time staff who should have worked on any of the weekday public holidays – Good Friday, Easter Monday, and Easter Tuesday in specific cases – they are still entitled to pay, even if they do not work. Generally you’ll pay at base rate for the hours staff would have been entitled to. Of course, if staff do work on the day, you’ll pay at a higher rate as dictated by the award (see above). But keep in mind: this only applies if they usually work on that day. For example, a part timer in Queensland who generally works Tuesday to Thursday probably wouldn’t get paid the public holidays because there’s no public holiday on those weekdays. Check your award/agreement to be sure! If your award dictates how rostered days off work, you should check to see if staff with an RDO on a public holiday are still paid. In some states, some kinds of businesses are not permitted to open on public holidays due to trading regulations. If this applies, you will probably still be required to pay staff who would otherwise work on that weekday. Again, if you’re not sure, it’s best to ask. Staff who work on a day that isn’t a public holiday Keep in mind that the rest of the award doesn’t shut off just because it’s Easter. For example, if you are in Tasmania and pay Saturday rates, you’ll still need to pay these on Easter Saturday (which is not a public holiday for you). Tell me some more interesting facts about payroll around public hoildays Did you know… If an employee takes sick leave around a public holiday (eg. Thursday April 24 to Monday April 28), they still get paid the public holiday if they were otherwise supposed to work that day (ie. full/part time) If an employee takes annual leave, public holidays during the leave period don’t count towards their annual leave balance Public holidays do not need to be paid for staff on unpaid leave Staff cannot be forced to work on a public holiday if they have reasonable grounds for doing so. Common reasons include: the amount of notice given, family responsibilities (especially over Easter), and whether one could reasonably expect the business to be open on a public holiday. Tanda’s employee time clocks automatically interpret industry awards – including public holidays – so you can be sure you paid staff right, without tedious manually data entry Where can I get help? Add the Fair Work Infoline to your speed dial, they are always happy to help. The number to call for any payroll queries is 131 394. What’s your favourite easter treat? We’re impartial to Lindt chocolate bunnies. Yum. Note: none of the above constitutes formal payroll advice. Always check with your accountant, bookkeeper, or Fair Work.
Events & Media | read
What does the new wage increase mean for your business?
The Fair Work Commission has announced the Australian minimum wage will be increased by 2.5% starting 1st July 2015. The 1.86 million lowest paid workers will get a $16 a week pay rise. Tanda used its own labour cost reporting system to measure the expected effects this will have on local businesses and found startling results. Tanda CTO Alex Ghiculescu said “The data determines there could be damaging effects, especially in industries with narrow margins.” “Take a typical restaurant and bar with around 40 staff. We project their annual wage costs to go up by just over $60,000 even before you add in oncosts for superannuation, workcover, leave entitlements, and so on.” “A change to the minimum wage has multiple flow-on effects when you consider various award levels, overtime rates and weekends.” “To put it in perspective, for such a business to keep similar margins they would need to sell around 10,000 beers in addition to current sales.” If businesses are incapable of raising profit and pricing margins to keep level with the expenses of the wage increase, they will be forced to lay off staff. Business lobby groups are in agreement with the prediction. Australian Chamber of Commerce and Industry direction of employment, education and training Jenny Lambert says “The Fair Work Commission didn’t do the right thing by the economy by bringing in such a substantial above average increase.” “We’re now looking at ways to utilise Tanda’s labour reporting systems to help businesses understand the impact on their bottom line,” Mr Ghiculescu says. Tanda wants to focus on finding a way to make the minimum wage fair for all Australians while keeping Australian businesses strong.
Events & Media Industry Insights | read
Greens MP introduces franchise wages bill
A new bill called the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015 was introduced to Parliament last week. The bill, sponsored by Melbourne Greens MP Adam Bandt, is a direct response to the recent 7-Eleven saga, in which the Fair Work Ombudsman has already found over $600,000 in underpaid wages and entitlements. The bill aims to prevent this by making the franchisor responsible for correcting underpayments if the franchisee is not able to pay staff correctly and on time. You can read the text of the bill here, as well as its explanatory memoranda. Nobody would argue that it’s fair how 7-Eleven staff were underpaid, but this bill skirts a fine line that all franchisors should be aware of. The bill is written in the typical legalese of the Fair Work Awards and the National Employment Standards, but the gist of it is: If a franchisee employer does not pay an employee by pay day, then the employee, or someone acting on their behalf, can give the franchisor a written demand for payment. The employee doesn’t need to do this immediately. They have 6 years from the pay day in which they can make this request. The franchisor has 14 days to pay the employee what they’ve requested. If the franchisor doesn’t pay the employee within the given 14 days, the employee (or a lawyer) can take the franchisor to court. So if the franchisor disagrees with the employee’s written request… it must go to court! The court must add interest to the amount already owed to the employee. This interest is calculated from the pay day (so at this point it’ll already be 14 days worth). In short, if this bill became law, every franchisor in Australia would have unknown liabilities on their books for the wages of everyone who’s ever worked at one of their franchises any time in the past 6 years. And they could get these written notices if a franchisee gets their payroll out an hour late. This bill could certainly set a precedent for even more responsibilities for head office over what franchisees are doing. We think this could significantly change the dynamics of franchise agreements and cause a lot of headaches. It’s important for franchises to be ready for this sort of thing. Whether mandated by law or common sense, as a franchisor you need to be sure that your franchisees aren’t doing dodgy things with payroll that are going to see your brand on the front page of the Australian. About the author Jake Phillpot is a Director of Tanda, a specialist time and attendance company focusing on the interpretation of Australian Modern Awards and Enterprise Agreements. Tanda maintains templates of popular Modern Awards including Fast Food, Hospitality, Retail, and Restaurant. These templates include the Fair Work mandated minimum wages of all levels of staff, as well as rules for penalty rates, allowances, and overtime based on the times that staff worked. For more information, read a Franchise Case Study with Red Rooster or call Jake on 1300 859 117. You can also request an enterprise POA.