Happy New (Financial) Year! Don’t miss important wage and super changes in FY17
Happy New (Financial) Year! Don’t miss important wage and super changes in FY17
Increase in minimum wage
From the 1st July 2016, the Fair Work Commission (FWC) has increased the national minimum wage by 2.4%. This change will result in an increase from $656.90 a week to $672.70 per week or $17.70 per hour.
This increase is slightly lower than last year’s increase of 2.5% and the amount continues the trend of lower increases compared to the 3% increase in 2014.
The media has reported that the wage increase was half of what the ACTU wanted, which was $30 a week extra for workers.
This change will apply to employees who are in the national system (i.e. covered by the Fair Work Act 2009(Cth) (Fair Work Act)) and not covered by an award or agreement.
Employees who are in the national system and covered by a modern award, will also have their minimum rate increased by 2.4%. The change in the minimum rate then involves a flow-on to the other rates in the award.
Employees whose wages are set out in an enterprise agreement will only be affected if their pay levels in the enterprise agreement are less than the minimum rates in the applicable award. The minimum wage trumps the enterprise agreement condition.
This change will not apply to employees who are covered by the State systems. They will have their minimum rate set by the relevant State tribunal, and you should be aware of any changes that might be coming as a result of these decisions
The increase won’t affect employees who are already getting paid more than the new minimum wage.
As for the impact on your business, if an employee is paid above the award rate for their classification there is no requirement to increase their salary by 2.4%. To avoid being red-carded, we suggest all employers check the wages paid to staff at or near award level. The website of the Fair Work Ombudsman has a handy PayCheck Plus tool for this purpose.
Failure to comply with the new minimum wage from 1 July 2016 can have significant consequences for an employer, including:
- claims for underpayment of wages to the Fair Work Ombudsman, the Federal Court or the Federal Circuit Court;
- detection of breaches by a Fair Work Inspector conducting a random workplace compliance audit – leading to enforcement action.
- action for breaches of the Fair Work Act, which can result in fines of up to $54,000 per breach; and
Increase in high income threshold
The high income threshold for unfair dismissal claims under the Fair Work Act will increase from 1 July 2016 from $136,700 to $138,900.
The threshold affects 3 main entitlements:
- employees who earn more than the high income threshold and who are not covered by a modern award or enterprise agreement, can’t make an unfair dismissal claim;
- employees who are covered by a modern award and have agreed to a written guarantee of annual earnings that is more than the high income threshold, don’t get modern award entitlements. However, they can make an unfair dismissal claim; and
- the maximum amount of compensation payable for unfair dismissal is capped at either half the high income threshold (ie $69, 450), or 6 months of the dismissed employee’s wage – whichever is less.
Employers should be mindful that employees who earn more than the threshold may still rely on other legal avenues for redress, such as an action for breach of contract or unlawful dismissal.
Superannuation changes – Proposed
Proposed changes to superannuation for 2016-2017 were announced in the Federal Budget on 3 May, however these changes will only be legislated if the Coalition is re-elected next month.
Lifetime Non-Concessional Contributions (NCC)
A lifetime non-concessional contributions (after-tax contributions) cap of $500,000 will be established under the proposed changes. This will replace the existing NCC cap of $180,000 and will be indexed to average weekly ordinary time earnings. To ensure maximum effectiveness, the new cap will take into account all NCCs made on or after 1 July 2007. It is said that this change will not only improve the sustainability of the superannuation system as a whole, but also provide Australians who make NCCs well below $500,000 with a greater degree of flexibility around when they contribute to their super.
Annual Cap on Concessional Contributions
The Federal Government proposes to reduce the annual cap on concessional superannuation contributions from $30,000 to $25,000. This lower cap will apply to everyone, meaning that the over-50s cap of $35,000 will be abolished from 1 July 2017. Also from 1 July 2017, the Federal Government will lower what’s called the ‘Division 293’ threshold from $300,000 to $250,000 which will mean that concessional contributions, when added to an individual’s income that is over $250,000 will be taxed a rate of 30 per cent. Under the new proposal, individuals will be able make additional concessional contributions where they have not reached the cap in previous years. Allowing for ‘catch-up’ concessional contributions will allow individuals who have interrupted work patterns, for example new mothers or carers, to accumulate superannuation balances commensurate to those who have not taken a break from the workforce.
Transfer Balance Cap
The Government has proposed the introduction of a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase, however balances will be able to increase above this cap once transferred due to tax-free earnings. When transition to retirement pensions were first introduced, the aim was to enable individuals to reduce their hours of work and supplement their resulting lower income through a non-commutable income stream from their super. However, from 1 July 2017, the Federal Government plans to introduce measures to strengthen the integrity of this aim including the proposal for earnings from a transition to retirement pension to no longer be tax-free, and for earnings to be taxed up to 15 per cent. The Government also plans to remove a rule that allowed individuals to treat certain super income stream payments as lump sums for tax purposes.
Recent HR cases in the headlines: how to learn from the behaviours of others in the new FY
Several large organisations have attracted media attention recently for employment law matters that have become public. The cases summarised below involve familiar topics of personal relationships at work gone wrong, alleged sexual harassment and unsafe office environments. With the new financial year almost here, it is a good opportunity for employers to conduct refresher training for all employees on appropriate workplace behaviours and conduct a review of their offices for safety risks.
Priceline CEO resigns after relationship with staffer: what does your code of conduct say?
In April, the Priceline Group (Priceline) released a statement explaining that its chief executive Darren Huston had resigned after an investigation by independent members of the Priceline Board found that he had a personal relationship with a female employee that violated Priceline code of conduct.
This resignation has resulted in an emergency succession procedure being launched, leading to the appointment of an interim CEO for Priceline and for one of its subsidiaries.
The relationship was revealed thanks to a tip from a whistleblower. The Board’s investigation revealed that although the employee in question was not under the direct supervision of Mr Huston; their relationship was “contrary to the company’s code of conduct” and “inconsistent with the board’s expectations for executive conduct”. Mr Huston has expressed his regret and did not receive any severance.
The Australian reported that Priceline’s employee code of conduct warns workers to avoid personal relationships that “conflict, or appear to conflict” with Priceline’s best interests. The code also bars employees from “supervising, reviewing or having any influence on the job evaluation, pay or benefits” of a person with whom the worker is having a romantic relationship.
Reminder: this case demonstrates that regardless of the seniority of an employee’s position, they must still be familiar with and abide by the policies and procedures set by their employer. Although romantic relationships at work are not illegal, the manner in which they are conducted and their potential to raise conflicts of interest for those involved may lead to the relationship breaching standards set by the employer.
Colliers CFO denies sexual harassment allegations: when is the last time you conducted anti-discrimination and harassment training?
In another example of a senior executive attracting media attention for unprofessional reasons, the chief financial officer at Colliers International Sean Unwin (Australia entity) is being sued by his former executive assistant, Alexandra Marks, for sexual harassment.
In early June the Financial Review reported various alleged facts of the case, including that Ms Marks alleges that Mr Unwin tried to force her head down to his private area, undressed in front of her to change into a party costume and tried to look up her skirt. Ms Marks alleges that Mr Unwin’s conduct forced her to resign and is seeking damages and costs.
Ms Marks has revealed in court documents that she did not report the behaviour to HR because she had observed the department dealing with sensitive matters in an inappropriate way previously, and did not trust the workers with the details of her complaint.
Ms Marks has filed an application in the Federal Circuit Court against both Mr Unwin and her former employers. Mr Unwin and Colliers are yet to file a defence however have released a statement saying that they will be vigorously defending all allegations. The matter will be heard in the Federal Circuit Court on 19 July.
Reminder: it is important that all employees understand their obligations under their employer’s anti-discrimination and harassment policies. Employers should conduct regular training on their policies and procedures so that all employees, regardless of their seniority, understand which conduct is inappropriate and potentially illegal in a workplace. It is also important that every employer ensures that the culture in their organisation encourages employees to feel safe when reporting alleged misconduct of others. Implementing a whistleblower policy is one way to foster a culture of openness in a workplace.
ANZ trainee awarded $582K after trip at work: when’s the last time you inspected the office for hazards?
In May the NSW Court of Appeal has awarded an ANZ bank employee $582,000 in damages after her foot became tangled in the wires under her desk causing her to trip and fall, injuring her knee. The employee sued ANZ for negligence. ANZ appealed this assessment based on contributory negligence by the employee who should have been aware of the hazard and taken action to reduce the risk of injury. That argument was rejected by the majority of the Court.
On appeal the court concluded in a very practical way that while the wires amounted to an obvious trip hazard, as it is a matter of common knowledge that tangled wires under a desk can (and do) create a trip hazard, once the employee’s foot unexpectedly encountered the cabling it was not then reasonable for her to ” somehow have adjusted her actions so as to eliminate or reduce the risk of injury from the hazard created by her employer.”
Reminder: under workplace health and safety laws all employers must ensure that, so far as is “reasonably practicable”, their workers are not exposed to health and safety risks. This requirement means that regular inspections of work environments should be conducted to ensure that hazards are detected and controlled. In addition to employers owing obligations to their employees under legislation, the ANZ case demonstrates that employees can also rely on common law negligence claims with considerable damages being awarded to employees who are injured at work.