Three key workplace relations changes from 1 July

With the end of financial year finish line in sight, now is a significant time for SMEs – with one of the most complex workplace relations systems in the world – it is essential that business owners stay updated and compliant with the changes that come into effect on, or after, 1 July.

1. Minimum wage and award rates increase

Each year, the Fair Work Commission (FWC) reviews the National Minimum Wage and base pay rates under Awards with changes to be implemented on the first full pay period on or after 1 July.

While there are different base rates for different job types under Awards, each of these stems from one core minimum wage which all businesses in Australia must abide by. Casual workers are covered by this National Minimum Wage, but they may also receive a 25 per cent casual loading.

This year, the minimum wage will increase by 3 per cent, to an hourly rate of $19.49 (or $740.80 per week).

In practical terms, this means that employees on the minimum wage will have to receive the increase from the first full pay period starting on or after Monday 1 July 2019.

2. Penalty rates

A reduction to public holiday and Sunday penalty rates under some Awards will take effect on 1 July. The reduction of public holiday penalty rates applies to the following Awards:

  • Hospitality Industry (General) Award 2010
  • Restaurant Industry Award 2010
  • General Retail Industry Award 2010
  • Fast Food Industry Award 2010
  • Pharmacy Industry Award 2010.

It is so important for small business to be across these changes. Workplace compliance can feel like a minefield and it is essential to get the right advice to avoid paying too little or too much.

3. Cash in hand payments

The Australian Taxation Office has declared ‘cash in hand’ payments will not be tax deductible from 1 July.

In addition, the following things will also lose their tax deductibility status:

  • Other employee payments that do not comply with pay as you go (PAYG) withholding obligations.
  • Payments to contractors who have not supplied a valid ABN.
  • Payments to contractors where the business does not withhold any tax.

Cash payments aren’t illegal if declared and reported, however, cash in hand payments are considered illegal where they’re used to hide income. Your accountant or financial adviser will be able to provide more information about these changes.

Preparation is the key to successfully handling change. Here are several things you can keep in mind to prepare your business for a successful transition:

Understand legal obligations
Make sure you know what the changes mean for you and your employees. Identify any changes you need to make to ensure you are compliant. Communicate with your staff to make sure everyone understands the change and their implications.

Up to date record keeping
This is a great opportunity to review your processes and make sure your record keeping is up to date.

Update employment contracts
You should regularly review and update your employees’ contracts. This is a good time to adjust your minimum wage employees’ contract accordingly to reflect their new remuneration rate.

Update your payroll system so it’s ready to go.
You don’t want to underpay your staff while you’re updating the payroll with the new wages. By making sure it’s ready to go as soon as July hits, you can avoid the issue of having to pay back wages and calculating unpaid superannuation.

Consider how you will cover the extra cost to your business
A good start is to look at underperforming employees and put steps in place to improve their performance, re-engage them in your business, and increase their motivation and productivity.

Create cost-effective incentives to reward high performing staff members
Employees who are earning above minimum wage may feel it’s fair for them to get a raise too. If this is not feasible, now is a good time to consider other, non-monetary based forms of reward and recognition that will let them know they are valued and appreciated.

Seek expert advice if you have any doubts or questions
If you are ever in any doubt about your legal obligations, it’s best to speak to an expert. The right advice can put your mind at ease and help you protect your employees – as well as your business – during times of great change.

Brandon Rigger, Senior Employment Relations Adviser, Employsure

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