Employ­ment law changes from 1 July 2016 

In Brief

It is a con­stant chal­lenge for employ­ers to remain up date with changes in the dynam­ic envi­ron­ment of employ­ment law. This arti­cle looks at a num­ber of impor­tant changes in this area which came into effect on 1 July 2016.
As well as increas­es to min­i­mum wages and the high income thresh­old” there is now a new Fair Work Infor­ma­tion State­ment that must be pro­vid­ed to new employ­ees – a fact that has not been wide­ly publicised. 

The Facts

Increase to min­i­mum wage rates under mod­ern awards, enter­prise agree­ments and for award-free employees

From the 1 July 2016 the min­i­mum hourly and week­ly pay rates under mod­ern awards have increased by 2.4%.

Employ­ers should check that rates of pay of employ­ees cov­ered by mod­ern awards do not fall below the new min­i­mum rates set out in the mod­ern awards.

Employ­ers with enter­prise agree­ments should note that the Fair Work Act 2009 stip­u­lates that an employ­ee’s base rate of pay can nev­er be below that which it would be if the employ­ee were instead cov­ered by an applic­a­ble mod­ern award, so employ­ers may wish to review cur­rent lev­els of remu­ner­a­tion in enter­prise agreements.

It some­times for­got­ten that for award-free employ­ees there is also a min­i­mum wage. For employ­ees of 21 years or over this fig­ure has now risen to $17.70 per hour, up from $17.29. Junior employ­ees (those 20 years of younger) are enti­tled to a per­cent­age of this fig­ure, set on a slid­ing scale, depen­dent on their age. Details are avail­able on the Fair Work Com­mis­sion’s website.

The above changes are effec­tive from the first full pay peri­od after 1 July 2016.

Employ­ers should note that there is usu­al­ly no oblig­a­tion on them to increase employ­ees’ pay rates if they are already equal to or greater than the new min­i­mum wage or award rates as the case may be (sub­ject to any rel­e­vant terms in a con­tract of employ­ment or an enter­prise agreement). 

A change to the high income threshold

The rules that deter­mine whether an employ­ee is enti­tled to bring a claim for unfair dis­missal under the Fair Work Act 2009 state that they may only do so, where their annu­al earn­ings are less than the high income thresh­old” pre­scribed by reg­u­la­tions from time to time unless a mod­ern award or an enter­prise agree­ment applies to the employ­ee’s employ­ment (in which case their earn­ings are not relevant).

Whether an employ­ee has a poten­tial rem­e­dy for unfair dis­missal may sig­nif­i­cant­ly impact on an employ­er’s abil­i­ty to dis­miss an employ­ee and the poten­tial risks of doing so (and the process it must fol­low to dis­miss the employee).

From 1 July 2016, the high income thresh­old has risen from $136,700 to $138,900. This also has an impact on the max­i­mum com­pen­sa­tion that can be award­ed for an unfair dis­missal claim. This is cal­cu­lat­ed on half of the high income thresh­old or 6 months’ of an employ­ee’s salary, whichev­er is the less­er figure.

This means that the max­i­mum award of dam­ages for unfair dis­missal cas­es (where rein­state­ment is not ordered) is now $69,450 (up from $68,350).

In cal­cu­lat­ing an employ­ee’s earn­ings for the pur­pose of the ascer­tain­ing whether they fall below the high income thresh­old, com­pul­so­ry super­an­nu­a­tion con­tri­bu­tions are not includ­ed nor are non-guar­an­teed earn­ings such as over­time, com­mis­sion or bonuses.

Non-mon­e­tary ben­e­fits may be includ­ed, such as the val­ue attached to the use of a com­pa­ny car for per­son­al use.

A new Fair Work Infor­ma­tion Statement

Sec­tion 125 of the Fair Work Act 2009 pro­vides that employ­ers must give all new employ­ees a copy of the Fair Work Infor­ma­tion State­ment as pub­lished by the Fair Work Ombuds­man before they start employ­ment or as soon as prac­ti­ca­ble after their employ­ment commences.

The state­ment pro­vides employ­ees with infor­ma­tion on their rights under the Fair Work Act 2009.

The Ombuds­man has recent­ly pub­lished a new Fair Work Infor­ma­tion State­ment (which deals with the increase to the high income thresh­old) and employ­ers should ensure that they issue the cur­rent state­ment to new employees.

Fail­ure to give employ­ees the cor­rect state­ment would tech­ni­cal­ly be a breach of a civ­il rem­e­dy pro­vi­sion under the Fair Work Act 2009 for which an employ­er could face a fine – up to $54,000 for a cor­po­ra­tion and $10,800 for an indi­vid­ual (ie direc­tor or HR Manager).

Employ­ers will be glad to note that max­i­mum penal­ties are one thing that has not increased from 1 July 2016!