Australian Minimum Wage Update 2017

Katrina Marquez

6 June 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. For example: 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 info@tanda.co. For more information on Fair Work’s 2017 wage updates, please visit the Fair Work website.     Disclaimer: 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.

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.

For example:

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 info@tanda.co.

For more information on Fair Work’s 2017 wage updates, please visit the Fair Work website.  

 

Disclaimer:

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.

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Easter Penalty Rates 2015 — What you need to know about paying 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). 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 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. Note: none of the above constitutes formal payroll advice. Always check with your accountant, bookkeeper, or Fair Work.

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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.

Awards & Rostering    |   

The Different Kinds of Award Interpreters

We often chat to people who have looked at a few different award interpretation tools on the market. Most are not really sure which award interpretation tool is right for their business.  In this post, we’re going to take a look at the different kinds of award interpreters out there to help you understand what is important when looking for a tool for you or your clients. Firstly, an Award Interpreter (read about Tanda’s Award Interpreter) is software that figures out how much staff should be getting paid based on their hours and times worked.  What award interpreter is right for you? There are four different kinds and the right one depends on how your staff get paid. Salary Costing Tools: Used to calculate payroll when all your staff are paid a fixed salary. Hourly Wage Calculators: Calculates when staff get paid a single hourly rate for all hours worked. Single Rate Calculators: Pays staff only single types of pay like weekday, Saturday and Sunday rates. However, it cannot handle any of the more common rate scenarios set out in Awards. Award Rule Engines: Does all of the above. In addition, they also calculate overtime, penalty rates, allowances, accruals and leave. “All my staff get paid a salary.” If you only employ salaried staff, a Salary Costing Tool is perfect for you. This is common in white collar workforces like accounting firms. In this case, you enter each employee’s yearly salary, set rules about how leave accrues and the tool does the rest. This is simple because staff are paid the same thing most pay runs. Most payroll systems (including MYOB and Xero) already include such a tool. If this is you, you’re in luck – you will not need an additional system for award interpretation! “My staff get paid the same hourly rate for all hours worked.” This might come up if you run a very small business with only a few staff. This is where nobody works on weekends, receives overtime or penalty rates. Generally, this means the business is only open for a few hours on days that it does open. If that’s you, you’re after an Hourly Wage Calculator. Warning: Be careful with this one. It’s easy to miss subtle wordings in Awards that require you to pay different rates at different times. Keep in mind that if any of your staff ever get more than one pay rate in a week, an hourly wage calculator won’t work as well anymore (even if it doesn’t regularly happen). Using an Hourly Wage Calculator, you enter the hourly rate for each employee. Each week you only enter the number of hours worked (you don’t worry about times). The tool multiplies the hourly rate by the number of hours to calculate total pay. Most payroll systems (including MYOB and Xero) already include such a tool, so if this is you, you’re also in luck – you won’t need an additional system for award interpretation! “I employ only one type of employee. They receive weekday and weekend rates only.” If you have staff that get paid hourly and receive different rates on weekdays, Saturdays, and Sundays, you might be able to use a Single Rate Calculator. However, be careful because this only works if you have a single employment type. An Employment Type refers to the way someone is employed. This includes full-time, part-time, casual or shiftworkers. If everyone you employ is the same employment type (e.g. everyone is Full Time) then this might work for you. When using a Single Rate Award Calculator, you enter the hourly rate that each employee gets during the week. You enter the multiplier for Saturday and Sunday shifts. Also, Public Holidays, if the calculator supports it. If an employee gets a base rate of $20 and your Saturday multiplier is 1.5 (Time and a Half), they receive $30 on Saturday’s. When you enter a timesheet the system pays staff at the appropriate rate based on the days worked only. Why do these only work for one employment type? If you you have a Full Time employee (base $20/hour), and a Casual employee (base $20/hour + 25% casual loading = $25/hour). This table shows how a Single Rate Award Calculator would calculate the cost of two shifts. Weekday Rate – Full Time Saturday Rate – Full Time Weekday Rate – Casual Saturday Rate – Casual 20 30 25 37.5 In most awards, you’re meant to apply the 1.5 multiplier and then the 25% casual loading! Here is how Fair Work’s Pay Rate Calculator says you should have paid: Base Rate – Full Time (1x) Saturday Rate – Full Time (1.5x) Base Rate – Casual (1.25x) Saturday Rate – Casual (1.75x) 20 30 25 35 Single Rate Award Calculator’s are great if you have staff on a single employment type as all their multipliers will be the same. However as soon as you have different kinds of staff, it stops working correctly. (It also doesn’t work if you have to pay overtime, penalty rates, deal with leave or accruals. It’s really just for simple weekend rates) Some payroll systems include Single Rate Calculators, but most likely you’ll need an external system. Most award interpretation tools on the market can be used for Single Rate Calculation. If that’s what you need, just pick whichever looks good and is well supported. However, if you have multiple employment types, or other more complex pay requirements (eg. Overtime, Allowances, Penalty Rates, RDOs, TOIL, or Leave costing), read on… “I employ more than one type of employee,” or “I have to pay overtime, penalty rates or allowances,” or “I have to manage RDO or TOIL accruals and leave” If any of these sound familiar, you’re after an Award Rule Engine. It’s called a rule engine because it’s based on different payroll rules that you configure, allowing you to pay staff at different rates across the week. However, it also covers different rates within the same day and for different employment types. Some Award Rule Engines also come with pre-built sets of rules called Templates. A template contains all of the rules necessary to pay under a particular Fair Work Award. A good template will include all of the base rates for different levels of staff (each employee will have a minimum wage and the template should include this). A really good template will automatically keep your payroll software up to date based on Fair Work Award updates. Here’s some other things to keep an eye out for when comparing Award Rule Engines. You should ask these questions before implementing a system so you don’t get burned 3 months down the track. Can I set different Saturday/Sunday multipliers for Full Time and Casual staff? When staff pay rates go up (each year when the Fair Work updates minimum rates), are these updated automatically? Are staff pay rates automatically updated in the linked payroll system? Does the engine understand the concept of Ordinary Hours? (Ordinary hours of work accrue superannuation and count towards overtime, while non-ordinary hours don’t. Systems that treat all time as ordinary can end up costing you a lot more in labour costs – and staff won’t complain if you get that wrong!) Can I configure different pay rates for junior staff? Does the system automatically update them on birthdays? How does the engine handle RDOs or TOIL accrual? Are you able to configure accrual for arbitrary leave types? Can the engine pay the correct allowances for split shifts? Can you configure how long a shift must be “split” before this kicks in? Can you configure automatic allowances (like Laundry Allowances) and manual ones (like Overtime Meal Allowances)? Just for specific employees? Based on the times or days that they work? Can I configure specific Public Holiday dates for each employee (important if you have  multiple sites with different Show Holidays or Regional Public Holidays). How is overtime calculated if an employee takes leave midway through the pay period? What if they take it on the last day? Can I calculate overtime based on an employee working outside their rostered hours? If a Template has been built based on an Award, can I change the ordinary span of hours based on agreement with the majority of my staff? Can I configure special provisions for shift workers? By the way… with Tanda’s Award Rule Engine, the answer to all those questions is yes! Hopefully, this post has helped clear some confusion around the types of tools that exist in the market and what you can use depending on how your workforce is set up. If you’ve got any further questions, feel free to email us on info@tanda.co

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About the author

Katrina Marquez

Customer Success: With a background in industrial relations, Katrina brings a wealth of knowledge to our Tanda team.

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