That’s right, its wage update time again! The end of the financial year is swiftly approaching and it brings with it an obligation for employers to review their rates of pay and ensure that they are compliant.
Today we are expecting the Fair Work Commission to deliver its 2015 minimum wage order. The order will include a determination about whether an increase will be applied to the rates of pay in modern awards and to the federal minimum wage. For businesses across the country this will mean updating payroll systems and making sure rates of pay are correct. Any changes announced by the FWC are expected to take effect from the first full pay period on or after 1 July 2015, so employers should start getting ready now.
Employers will generally fall into one of four categories for the purpose of reviewing their wages – those who pay under an award, those who pay under an employee collective agreement, those who are not covered by either an award or agreement and those who have a combination of the above.
To help prepare, we have outlined the key steps for each type of employer to think about in the lead up to 1 July 2015.
Employers who pay under an award
- Review the relevant modern award for each classification of employees covered by the business
- Update any necessary payroll information to reflect the changes in the award that impact rates of pay
NOTE: Changes for the new financial year may not be limited to rates of pay. For example, the junior classifications in the General Retail Award 2010 will change on 1 July 2015 so that employees 20 years of age with more than 12 months experience will receive the full adult rate of pay where they had previously received 95% of the adult rate.
Employers who pay under an employee collective agreement
- Review the employee collective agreement – what does it say about wage increases? Agreements can deal with wage increases in different ways and employers need to ensure that they are complying with the obligations set out in their agreement. If you’re not sure what your agreement says, we can help you understand it better.
- Section 206 of the Fair Work Act says that regardless of what an agreement says, all rates of pay must, at least, meet the relevant award minimums. This means that even after any increase required under an agreement is applied, employers should still audit their rates against the relevant modern award to make sure they meet or exceed the minimums for each classification.
Employers who are not covered by and award or an agreement
- If an award or an agreement does not cover an employer and their employees, they will be covered by the federal minimum wage.
- To ensure compliance, employers should compare their rates of pay against the federal minimum wage to ensure they are meeting or exceeding the minimum rate of pay.
Employers who are covered by more than one of the above
Your business may have award covered employees, employee collective agreement covered employees and award free employees. You should follow each of the steps above, as applicable.
To help you get ready for 1 July 2015 and stay compliant, we are offering a wage update service. If you would like our expert assistance and advice, please contact THE WORKPLACE.
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