Increase in minimum wage
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From the 1st July 2015, the Fair Work Commission (FWC) has increased the national minimum wage by 2.5%. This change will result in an increase from $640.90 to $656.90 per week or $17.29 per hour.
The slightly lower increase from last financial year’s 3% increase, is due to several factors including the:
- growth in unemployment rate from its recent low of 4.9 per cent in March 2011, to 6.1 per cent in April 2015; and
- lower growth in consumer prices and aggregate wages growth over the past year.
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 2.5%. This then involves a flow-on to the other rates in the award.
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.
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 2.5%. 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 2015 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;
- actions for breaches of the Fair Work Act, which can result in fines of up to $51,000 per breach ($54,000 once the new penalty rate comes into effect – see below); and
- detection of breaches by a Fair Work Inspector conducting a random workplace compliance audit – leading to enforcement action.
Superannuation guarantee: no increase (9.5%)
There will be no increase in compulsory employer superannuation contributions this new financial year, or any financial year, until possibly 30 June 2021, or when the government changes.
This means that the compulsory contribution amount remains at the amount introduced last year, being 9.5%.
Superannuation is an area which most clearly reflects the strategies of the political party in government. When it was in power, the Labor Government had intended 2015/6 to herald an increase to 10%, while the Coalition Government has deferred the 10% increase it originally intended for 2018, to 2021.
Assuming that the current government’s strategy applies for the foreseeable future, the eventual increase to a 12% superannuation rate just might occur in 2025.
Increase in high income threshold
The high income threshold for unfair dismissal claims under the Fair Work Act will increase from 1 July 2015 from $133,000 to $136,700.
The threshold affects 3 main entitlements:
- employees who earn more than the high income threshold and who aren’t 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 $65,000), or 6 months of the dismissed employee’s wage – whichever is less.
Increase in penalty unit
The Senate has passed the Crimes Legislation Amendment (Penalty Unit) Bill 2015 (Bill) which has resulted in an increase to the value of a penalty unit.
The Bill amends the Crimes Act 1914 (Cth) to increase the value of the penalty unit for Commonwealth criminal offences from $170 to $180.
According to the Explanatory Memorandum:
- this amendment is broadly consistent with inflation since the penalty unit amount was last adjusted in 2012; and
- the increase will only apply to offences committed on or after the date that the amendment comes into force – it won’t affect current proceedings for Commonwealth offences.
The new penalty unit amount will come into effect on 31 July 2015 so beware of committing an offence after that date!
Anti-Bullying in the Fair Work Commission
Now that the anti-bullying jurisdiction has moved beyond its ‘infant’ status, employers should have a finer awareness of their obligations and duties under the Fair Work Act and how to avoid becoming a statistic at the FWC.
An analysis of the Quarterly Reports and case decisions produced by the FWC has revealed:
- fewer claims than predicted: before the introduction of the anti-bullying provisions in January 2014, the FWC predicted it would receive about 3500 ‘stop-bullying’ applications per year; in 2014 it received around 700;
- ‘unreasonable behaviour’: from FWC judgments, the following conduct is understood to constitute unreasonable behaviour: aggressive and intimidatory conduct, belittling or humiliating comments, victimisation, spreading malicious rumours, practical jokes or initiation, exlcuding from work related events, unreasonable work expectations;
- ‘reasonable management action’: is the defence used by employers. The FWC has refined this concept to mean that the employer’s action must be lawful and not ‘irrational’, to avoid being considered bullying. In reaching its decision, the FWC will consider the context in which the management action occurred.
- othe key principles that have emerged from FWC judgments include:
- conduct that occurred before 1 January 2014 (when the bullying legislation was introduced) may be relevant and can be considered by the FWC, but this is in the context of it being linked to other conduct occurring after that date;
- the provisions no longer apply if the employee ceases working for the employer. An employee can still make an application during his/her term of notice of termination, but it would be unlikely to succeed because employment is about to end and the threat of future bullying is thus removed; and
- confidentiality of proceedings cannot be guaranteed. The mere prospect of embarrassment or distress to a party from being identified will not be enough to justify an order of confidentiality.
Another key principle that has emerged from FWC decisions to date is an understanding of when conduct will be considered to be ‘at work’. In general there must be a ‘substantial connection’ to work, but the alleged bully does not have to be ‘at work’ at the relevant time.
See our previous blog on cases discussing what constitutes ‘the workplace’ in the modern working environment.
And, just a reminder, bullying at work under Section 789FD(1) of the Fair Work Act states that a worker is bullied at work when:
- another individual or group of individuals repeatedly behaves unreasonably towards the worker; and
- that behaviour creates a risk to health and safety.
Further guidance can be found in the FWC’s recently released ‘Anti-bullying benchbook‘.
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