While the commencement of the financial year usually means changes relating to taxation, this date also has implications with respect to workplace relations-related matters, including awards, unfair dismissals, paid parental leave and superannuation (particularly in relation to statutory monetary amounts).
This article identifies a number of key workplace changes that will, or may, affect your workplace.
From 1 July 2012, Fair Work Australia increases affect wage rates, reimbursement allowances and penalties and loadings.
Fair Work Australia (FWA) increased classification rates in modern awards by 2.9%. This, and consequent increase to allowances, will take effect from the first pay period commencing on or after 1 July 2012.
The standard transitional provisions in many modern awards mean that the actual increase to minimum wages for many employees will not be 2.9% because of phasing. In most cases of phasing 40% of the transitional amount (currently 60%) will also be added to or subtracted from the employee’s modern award rate.
A more detailed explanation of the ‘transitional provisions’ in modern awards can be found in a recent article on WorkplaceInfo.
Also, from the first pay period commencing on or after 1 July 2012, reimbursement allowances (eg meal allowance, motor vehicle usage allowance, clothing and tool allowance) will increase based on a formula (the increase in the relevant component of the Consumer Price Index), while other modern award allowances will generally increase by 2.9%. Allowances are not phased, so the relevant modern award allowances, as increased, apply unless displaced by an enterprise agreement.
Penalties and loadings
Penalties and loadings (including the casual loading) are also phased-in under the standard transitional provisions. Penalties and loadings which are being phased into the modern award levels will increase/decrease by 40% of the ‘transitional percentage’ from the first pay period commencing on or after 1 July 2012.
UNFAIR DISMISSAL THRESHOLDS
Employees who are award/agreement-free and whose annual rate of earnings is more than the ‘high income threshold’ are excluded from the unfair dismissal provisions under the Fair Work Act 2009. From 1 July 2012, the threshold, which is indexed each year, increases from $118,100 pa to $123,300 pa. The new threshold applies to dismissals on and from 1 July 2012.
Under the Act (s392(5)), there is a cap on the amount of compensation that Fair Work Australia (FWA) can order in an unfair dismissal matter. The cap represents half the amount of the high income threshold immediately before the dismissal. The compensation cap for a dismissal that occurs on or after 1 July 2012 is $61,650 (half of $123,300 pa).
GUARANTEE OF ANNUAL EARNINGS
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 ($123,300 pa) in return for not observing the relevant modern award. However, the guarantee of earnings does not exclude the award-covered employee from the unfair dismissal regime.
NATIONAL PAID PARENTAL LEAVE
The National Paid Parental Leave (NPPL) Scheme provides eligible working mothers with 18 weeks of pay at the national minimum wage, which is paid by the Commonwealth Government. From the first pay period commencing on or after 1 July 2012 the NPPL amount will increase from $589.30 to $606.40.
SUPERANNUATION CONTRIBUTIONS CAPS
The Superannuation Guarantee (SG) requires employers to contribute at least 9% of an employee’s ‘ordinary time earnings’ per quarter, to a maximum superannuation contribution base of $43,820 per quarter. This amount is indexed. For the quarter starting 1 July 2012, and the three following quarters, the maximum superannuation contribution base will be $45,750. This means the maximum amount of SG the employer needs to contribute to the relevant employee superannuation fund is $4,117.50 per quarter (9% of $45,750).
SUPERANNUATION CONCESSIONAL CAPS
The government has made a number of changes to concessional caps. The net result is that for the financial year starting 1 July 2012 the concessional cap for all employees is $25,000. There is no higher concessional cap for older workers in 2012–13. The non-concessional cap, which is the cap on post-tax contributions such as employee contributions which are not made under a salary sacrifice arrangement, remains at $150,000 for 2012–13.