As the new financial year officially kicks off, businesses around the country are refreshing and resetting their commercial strategies. According to discussions we’re having with customers, there’s also a clear priority in pursuing a competitive advantage: their people.
Employers are grappling with an extremely tight labour market, rising salary expectations amid cost of living pressures, and the ongoing debate around flexible working. Despite the challenges, there are several things businesses can do to get their HR house in order and enter the new financial year on solid footing.
The first is to ensure that legislative changes coming into effect on 1 July, like those impacting award rates and super contributions, are accounted for in employment contracts and payroll systems. The second is ensuring that the processes and strategy your business adopts for the new year optimise people management outcomes and team performance.
In the first of this two-part series, we look at the important legal obligations to get in place before moving on to the people priorities that can help build, or rebuild, your HR strategy in FY22.
Keeping pace with new legal obligations
Employers should be on top of a range of legislative changes from 1 July 2022. In case you have missed them, here is a brief recap:
Changes to superannuation
This financial year, the superannuation guarantee, or the percentage of employees’ remuneration that employers need to pay, will increase. The new superannuation guarantee rate of 10.5%, up from 10%, is the first step in the scheduled increase each year to 2025 to reach the eventual rate of 12%.
At the same time, the minimum monthly threshold for employees to qualify for superannuation contributions has been removed. Before 01 July 2022, employees needed to earn over $450 a month to trigger an employer's obligation to pay the super guarantee.
Increased award rates
In June, the Fair Work Commission handed down its national minimum wage order, increasing the national minimum wage by 5.2%. That means millions of Australians will now receive a minimum gross pay of $21.28 per hour.
In addition to this, minimum modern award rates will increase by:
- 4.6% for rates currently above $869.60 per week, and
- $40 per week or $1.05 per ordinary hour for rates currently below $869.60 per week.
These increases will be effective from the first full pay period on or after 1 July 2022, except for awards within the aviation, tourism and hospitality sectors, which will apply from the first full pay period on or after 1 October 2022.
In addition to the minimum award rates of pay, these increases may also apply to other award payments, including penalty rates, overtime and allowances.
Changes to the SCHADS Award
Changes to entitlements under the Social, Community, Home care and Disability Services Industry (SCHADS) Award have also taken effect, impacting the minimum payments for some casuals and part-time employees.
This includes an increase of the minimum payment for casual home care employees from one to two hours, an increase of minimum hours for part-time social and community services employees to three hours, and all other employees to two hours.
New high-income unfair dismissal threshold
The high-income threshold provides a ceiling to the protections an employee can gain from unfair dismissal. It means an employee not covered by an award or an enterprise agreement earning more than the threshold won’t have protections under the Fair Work Act.
As of 01 July, the threshold has increased from $158,500 to $162,000. This figure is set annually and does not include payments an employee receives that can’t be calculated in advance, such as sales commissions.
Quick checklist for employers
- Have you communicated the relevant changes to impacted employees?
- Have you updated employee contractual terms to ensure compliance with these changes?
- Have you reviewed award-covered employees who are paid salaries to ensure the salary keeps up with these new minimums?
- Have you updated your policies and practices around award changes if your business is covered by the SCHADS Award?
- Has the data been updated in your payroll processes and systems?
With the hygiene factors taken care of, businesses can be confident they are entering the new year with their HR foundation in order.
Read part two of the series, which focuses on strategies to help get the most out of your people and ways to keep those systems firmly in place.
To discuss these or other changes and how they might impact your employee contracts, please contact us.
