Annual increases to wages, are you paying employees correctly?

The ATO has an employee/contractor decision tool to assist in determining how an individual should be treated and paid. AAT recommends that when you are providing payroll related services to your clients you consider engaging HR experts to provide guidance, such as the AAT HR AdThe Fair Work Commission has recently announced its decision on the annual wage review for Australian workers covered by the Fair Work system. From the first full pay period commencing on or after 1 July 2019:

  • All Modern Award rates will increase by three per cent (with weekly wages rounded to the nearest $0.10)
  • The National Minimum Wage will increase by three per cent to $19.49 per hour (and an extra $21.60 per week for a full-time employee), an increase of $0.56 per hour for the hourly rate, and $740.80 per week.

The Commission’s decision only confirms the basic increase in minimum rates while confirmation of the specific rates (including new allowance rates) for each individual Award will be released before 1 July 2019.

Minimum rates of pay are highly regulated in Australia. The Modern Awards and the Fair Work Commission set minimum rates of pay that are to be paid to employees. Minimum rates of pay may also be set by an enterprise agreement.

Now is an ideal time to prepare for an increase in costs as a result of the annual wage review. In addition, it is a perfect opportunity to ensure your business is meeting its legal obligation to correctly pay employees the applicable remuneration, including, where relevant, penalties and loadings, overtime and allowances following the increase.

In this newsletter we highlight the importance of ensuring you are paying your employees correctly and additionally provide information on finding and using the correct rates of pay.

What should I do to ensure my employees are properly paid?

  • There are several key actions a business can take including:
  • Becoming familiar with the National Employment Standards (the NES). Here is a link to the NES details on the Fair Work Ombudsman website.
  • Finding out the relevant modern award that applies to the industry and / or the roles that your employees perform and becoming familiar with the terms in the award.
  • Determining the correct classification of work under the modern award and the rates of pay that apply to the various roles within your workplace.
  • If an enterprise agreement applies, becoming familiar with the terms and the rates of pay that apply.
  • Being aware of the administrative obligations related to record keeping and the preparation and issuing of pay slips.

Most information is available on the Fair Work Ombudsman’s website.

Where can I find the correct rates of pay?

 Minimum Wage  You can refer to the Fair Work Ombudsman pay guides by clicking here.
 Agreements  If your employees are covered by a registered agreement, check the agreement for rates. The agreement must be available within the workplace for all employees to refer to.
 Awards  You can refer to the Fair Work Ombudsman pay guides by clicking here. The relevant award(s) must be available within the workplace for all employees to refer to.
 Salary Payments  An annual salary is an agreement about the amount of pay for work over a 12-month period. They are often included in employment contracts. For more information, click here.
 Fair Work Ombudsman’s ‘Pay and Conditions Tool’ (the Fair Work Ombudsman’s website refers to it as ‘The P.A.C.T’ and it includes calculators for various leave types)  

‘Pay and Conditions Tool’ is a wage calculator that can be used to calculate an employee’s:

  • minimum wages
  • penalty rates and
  • allowances

The calculator can be used as if you are an employee or an employer to determine rates of pay.

To access the tool, click here.


Fair Work Ombudsman – focus on compliance

The Fair Work Ombudsman places a significant focus on working with employers to ensure they understand their obligations in relation to paying employees correctly. The Fair Work Ombudsman runs targeted campaigns across various industries and / or regions in Australia which has included initiatives such as information sessions through to targeted Audits related to pay and conditions.

Additionally, the Fair Work Ombudsman also acts on behalf of employees who have formally raised complaints / concerns relating to their conditions. In recent months, the Fair Work Ombudsman has supported employees in a number of businesses secure back payments, including from some high-profile business owners who are well known from their television appearances. Recently, the Fair Work Ombudsman has also successfully prosecuted a business owner in northern Queensland and that business owner has now commenced a period of imprisonment owing to underpayment of employees’ pay and other terms and conditions.

Summary

Understanding and applying correct rates of pay and conditions is critical to ensuring your business is legally compliant. Employers must make serious efforts in ensuring the employees of their business are correctly paid and have their entitlements managed.

Needing advice and help?

If you would like assistance with understanding the application of correct rates of pay, modern award terms or you would like your rates of pay reviewed and checked and any information about leave entitlements, the team of advisors at AB Phillips can assist you with practical advice and support.

For support and assistance, please contact our team of advisors at AB Phillips, Monday to Friday between 9:00 am and 5:00 pm AEST by phone on 1300 208 828 or email advice@abphillips.com.au.

This newsletter refers to employees engaged in the national Fair Work system. If you are not sure if your employees are in the national Fair Work system, click here or contact us at AB Phillips for assistance.

The national Fair Work system applies to employees of incorporated companies and all employees engaged in the State of Victoria, the ACT and the Northern Territory and to employees of incorporated companies in other states.

Please note that the above information is provided as comment and should not be relied on as a substitute for detailed professional advice from AB Phillips or professional legal and/or financial advice on any particular matter. Where you would like additional information and support about the content in this document please contact AB Phillips.