There are a standard set of changes to employment conditions which commence on 1 July each year. The Fair Work Commission conducted the expected National Minimum Wage case but with a rather larger than expected increase in minimum wages. This year a very active federal parliament has added a number of other one off changes that took effect in June or from 1 July 2023, such as paid parental leave, additional classes of employees who can request flexible working arrangements, and access to the Fair Work Commission for employees who are not satisfied with the outcomes of their request for flexible working arrangements or extensions to unpaid parental leave.

National Minimum Wage

From the first full pay period commencing on or after 1 July 2023 the Australian National Minimum Wage increases to $23.23 per hour or $882.80 for a 38 hour week. The National Minimum Wage applies to employees not covered by an award or enterprise agreement.

For employees covered by an award such as the Educational Services (Schools) General Staff Award 2020, or the Social, Community, Home Care and Disability Services Industry Award 2010, the minimum award wages increases by 5.75 per cent from the first full pay period starting on or after 1 July. Minimum wages for some employees in the aged care sector may include some employees covered by the Aged Care Award, the Social Community Home Care and Disability Services industry (SCHADS) Award and the Nurses Award.

For employees covered by an enterprise agreement, the base rate in their agreement cannot be less than the base pay rate in the relevant award.

Superannuation

From 1 July 2023 the superannuation guarantee rate increased from 10.5% to 11%.

Unfair Dismissal Threshold

The maximum income that an employee can be earning in order to be eligible to make an unfair dismissal claim in the Fair Work Commission, known as the “high income threshold” was $162,000 per annum. This amount increased on 1 July 2023 to $167,500. This limit only applies if an employee is not governed by a modern award or enterprise agreement. Employees covered by an award are able to lodge an unfair dismissal claim regardless of their salary.

Does the Award Apply? Increase in the High Income Threshold

An employee whose classification is covered by an award, such as the Clerks Private Sector Award 2020, Banking Finance and Insurance Award 2020, Educational Services (Teachers) Award 2010, or the Health Professionals and Support Services Award 2020 will continue to be covered by the conditions in that award even though they may be paid at a higher level than the pay rates in that award. However, that employee will no longer by covered by the award if they have a “Guarantee of Annual income” that is above the prevailing “high income threshold” which was $162,000 and increased from 1 July 2023 to $167,500. The guaranteed annual income amount must be in writing and the guaranteed annual income amount encompasses wages, agreed money value of non-monetary benefits, but does not take into account compulsory superannuation or variables such as bonuses and commissions.

Paid Parental Leave

For parents of babies born or placed for adoption on and from 1 July 2023, the rules around the federal government’s Paid Parental Leave Scheme have changed. Dad and Partner Pay is now absorbed into a total of 20 weeks (made up of what was previously 18 weeks of primary carer leave and two weeks’ Dad and Partner leave) that can be shared between the two partners. The paid leave can be taken at any time within the first 24 months after the birth or placement and may be taken at the same time as the employee is on unpaid leave or paid (such as annual leave or long service leave) leave. The eligibility rules have also been freed up, for example, where the employee’s own income may have rendered them ineligible, a new “family income” of $350,000 per annum is now available as an alternative criterion. Eligibility is assessed by Services Australia, which continues to administer the scheme and make the payments, either directly to the employee or via the employer.

Flexible Working Arrangements

From 7 June 2023:

• the right to request a flexible working arrangement has been expanded to employees who are pregnant and those who are experiencing family and domestic violence
• an eligible employee whose request for a flexible working arrangement is refused may now apply to the Fair Work Commission to settle the matter if, following discussions with their employer on possible alternative arrangements, they are still not satisfied with the outcome.

Unpaid Parental Leave

From 7 June 2023, an eligible employee whose request for an extension of their unpaid parental leave beyond 12 months is refused, may now apply to the Fair Work Commission to settle the matter, if, following discussions with their employer on possible alternative arrangements, they are still not satisfied with the outcome.

Pay Secrecy Clauses

From 7 June 2023, an employer who includes a pay secrecy clause in a new contract of employment will be subject to fines. The ban on including pay secrecy clauses in new contracts came into effect from 7 December 2022. Note that for contracts entered into before 7 December 2022, the pay secrecy clause continues to apply until the contract is varied, such as when an increase in pay is not contemplated in the contract or the employee is promoted, at which time the clause becomes unenforceable.

What Should Employers Do?

Employers should:

• review payroll procedures to ensure that the increases in minimum rates and superannuation are being actioned
• ensure that new employment contracts made after 7 December 2022 do not include pay secrecy provisions
• review procedures for responding to requests for flexible working arrangements and extensions to unpaid parental leave and be prepared to discuss and consider alternative options to address the organisation’s operational needs and the employee’s circumstances
• review contracts of employment to ensure that new contracts do not include pay secrecy clauses
• be alert to any variations to contracts which contain pay secrecy clauses entered into before 7 December 2022, as that will render the pay clauses unenforceable.

Further Information

• National Minimum Wage: Fair Work Ombudsman
• Paid Parental Leave Scheme: Services Australia