Noteworthy workplace changes from 1 July

Analysis

Noteworthy workplace changes from 1 July

A new financial year has many implications for employers and employees apart from tax returns. This article identifies a number of key workplace changes that will (or may) affect business.

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A new financial year has many implications for employers and employees apart from tax returns. This article identifies a number of key workplace changes that will (or may) affect business.

[This article is an edited version of writings prepared by Dick Grozier, director of Industrial Relations, Australian Business Industrial (NSW Business Chamber).]

Award increases
 
The recent 3.4% increase to award wages handed down by Fair Work Australia (FWA) and consequent increase to allowances will take effect from the first pay period to start on or after 1 July. FWA increased classification rates in modern awards and pre-modern award pay scales by 3.4%. 

The standard transitional provisions in many modern awards mean that the actual increase to minimum wages for many employees will not be 3.4% because of phasing. In most cases of phasing 1/5th of the ‘transitional amount’ will also be added or subtracted.

Also from the first pay period starting on or after 1 July, reimbursement allowances (such as mileage, meal, clothing and tool allowances) will increase by the increase in the relevant component of the CPI, and other allowances will generally increase by 3.4%.

Allowances are not phased, so the relevant modern award allowances, as increased, apply, unless displaced by an agreement.

Penalties and loadings (including the loading for casuals) are also phased under the standard transitional provisions. Penalties and loadings that are being phased into the modern award levels will increase/decrease by 20% of the ‘transitional percentage’ from the first pay period starting on or after 1 July.

Unfair dismissal thresholds
 
Employees who are award/agreement-free and earning more than the ‘high income threshold’ are excluded from the national unfair dismissal provisions. From 1 July 2011, the threshold — which is indexed — increases from $113,800 pa to $118,100 pa. This new threshold applies to dismissals occurring on and from 1 July.

A small business employing fewer than 15 employees is entitled to rely on the Small Business Fair Dismissal Code in the event that a claim is made against them. An employee terminated within the ‘minimum employment period’ cannot bring a claim of unfair dismissal. For a small business, the minimum employment period is 12 months, otherwise it is six months.

Note: Since 1 January 2011, the number of employees is determined by a head count. Casual employees employed on a regular and systematic basis are included.

High income threshold
 
An employer can also enter into an agreement with an award-covered employee guaranteeing that the employee’s annual earnings will exceed the high income threshold in return for not observing the relevant modern award. However, this guarantee of earnings does not exclude the award-covered employee from the unfair dismissal regime.

National paid parental leave scheme
 
The national paid parental leave scheme provides eligible working mothers with 18 weeks’ pay at the national minimum wage, which is paid by the government. From the first pay period on or after 1 July, this will increase from $569.90 to $589.30.

For births or adoptions on or after 1 July 2011 the employer becomes the paymaster for most employees. Where the mother taking parental leave has been employed for at least 12 months with the employer prior to the birth or adoption, the Family Assistance Office will pay the money to the employer and the employer must pay the parent.

Prior to 1 July, the FAO paid all parents in the scheme directly, although employers could opt to take on the paymaster role.

Superannuation contributions caps
 
The superannuation guarantee requires employers to contribute at least 9% of an employee’s ‘ordinary time earnings’ per quarter to a maximum super contribution base of $42,220 per quarter. This is indexed. For the quarter starting 1 July, the maximum super contribution base will be $43,820.

Contributions for the quarter ending 30 June 2011 must be made to the employee’s fund by 28 July to avoid a superannuation guarantee charge.

Concessional superannuation contributions (employer contributions meeting the superannuation guarantee, award or agreement obligations; employee salary sacrifice contributions and government co-contributions for low income employees) are taxed on entry to the fund. Concessional contributions are also capped and contributions in excess of the cap are taxed much more heavily.

In 2009, the government reduced the caps to $25,000 and $50,000 for employees who are 50 and over. The $25,000 cap for employees under 50 is indexed. However, the increase to the indexing factor which is used is not great enough to move the cap, which remains at $25,000 for contributions made from 1 July 2011 until 30 June 2012. The $50,000 cap for employees 50 and over is not indexed and remains at $50,000.

Reportable Employer Superannuation Contributions (RESC) comprise employer contributions that can be influenced by the employee (including the employee’s sacrifice contributions), but not employer contributions to meet the superannuation guarantee, or obligations under an award or enterprise agreement. RESCs made for the year ending 30 June 2011 must be included in the employee’s payment summary for 2010–11.

NSW portable long service schemes
 
Two particular industry matters in New South Wales are noted below.
 
Building and construction industry
 
Long service leave in the NSW building and construction industry is funded by a levy on building work. However, employers of building workers have to report registered workers’ service within 7 days of termination or, for continuing workers, service over the previous year up to 30 June must be reported. The Long Service Corporation will email employers in early July with details of the workers they understand to be currently employed by the business for their amount of service over the past year to be filled in. The return must be completed and returned by 31 July.

Contract cleaning
 
The new NSW portable long service scheme for the contract cleaning industry starts on 1 July 2011. Contract cleaning companies will have to register with the Long Service Corporation by 31 July 2011, and new contract cleaners must register within 1 month of becoming a contract cleaner. Employers must also advise the corporation of their employees and when they commence or terminate employment.
 
The long service fund is paid for by a levy of 1.7% of employees’ ordinary wages and paid by the employer. Cleaners who are independent contractors must also pay the levy and provide service details.
 
The first payment is due after 30 September for the quarter staring on 1 July, and the return must be lodged with the corporation by 14 October.

Contract cleaners can be expected to raise their rates to cover the levy.
 
Source: Australian Business Industrial is the registered industrial relations arm of the NSW Business Chamber.
 
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