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Key Employment Law and Tax Changes for FY 2017/2018

The commencement of the new financial year will bring with it important changes to minimum wages, national unfair dismissal regulations and various tax thresholds and rates.

Increases to minimum wage rates for national system employers (all states and territories, except for Western Australia (WA))

In accordance with the 2017 annual wage review decision of the Fair Work Commission, the following changes take effect to minimum wages from the first full pay period on, or after, 1 July 2017:

  • all modern award rates of pay will increase by 3.3 percent, with flow-through proportionate increases to hourly minimum wages and annual salaries;
  • the national minimum wage for adults working full time (38 hours per week) will increase from $672.70 to $694.90 (an increase of $22.20 per week);
  • the national minimum hourly rate for permanent national system employees will increase from $17.70 to $18.29 per hour (an increase of 59 cents per hour); and
  • the casual loading for award/agreement free employees remains set at 25 per cent, consistent with the standard casual loading in modern awards.

The above changes apply to all workers in the national system including:

  • junior employees;
  • employees to whom training arrangements apply;
  • employees with a disability, and;
  • to piece rates, through the operation of the methods applying to the calculation of those wages.

The decision is reported to “directly affect over 2.3 million employees in Australia who are reliant upon minimum rates of pay.”

The above new rates provide for a higher increase than last year’s increase of 2.4 percent. The Fair Work Commission stated that inflated concerns about the impact of minimum wage increases on

employment may have led to it being "overly cautious" in past rulings.

Now is an ideal time for all employers to conduct an annual review of their remuneration arrangements with their employees to ensure ongoing compliance with minimum wage rates.

Changes to minimum wage rates for WA system employers

For those employers in WA who are outside the national system, effective from 1 July 2017:

  • the minimum wage will increase from $692.90 to $708.90 per week (i.e. the WA minimum wage will be $14.00 per week higher than the national minimum wage); and
  • all WA State award rates have increased by 2.3%.

In the WA private sector this change applies to the employees of employers who are not incorporated, such as sole traders and partnerships of individuals. Changes to the high income threshold in the federal unfair dismissal jurisdiction The Fair Work Commission has announced the high income threshold for the purposes of the Fair
Work Act will increase from $138,900 to $142,000 from 1 July 2017. The threshold is indexed annually from 1 July.

The threshold is relevant for the purposes of:

  • protection from unfair dismissal – a federally regulated employee, not covered by an award or statutory workplace agreement, does not have access to the federal unfair dismissal jurisdiction if their annual rate of earnings exceeds the high income threshold (s382 of the Fair Work Act);
  • maximum compensation from an unfair dismissal claim – the maximum compensation which might be awarded by the Fair Work Commission for a successful unfair dismissal claim will increase to $71,000 (i.e. half the new high income threshold and up from $69,450) – s.392(5) of the Fair Work Act; and
  • considering whether a modern award applies to an employee – a modern award, that would otherwise apply to an employee, does not apply where the employee is a high income employee with a guarantee of annual earnings (s47 and 329 of the Fair Work Act).

New Fair Work Information Statement

The Fair Work Ombudsman has yet to publish the latest version of the Fair Work Information Statement which applies from 1 July 2017.

The Statement changes with effect from 1 July each year. Historically, the latest version is not available until 1 July.

It is a requirement under s125 of the Fair Work Act that a national system employer give each employee a copy of the Fair Work Information Statement before, or as soon as practicable after, the employee starts employment.

The Fair Work Information Statement informs employees about several matters including the National Employment Standards and the high income threshold pursuant to s124 of the Fair Work Act.

Failure to give the Statement, or the current version of it, is a breach of the National Employment Standards, attracting liability to a civil penalty.

Increases to civil penalties

Also taking effect from 1 July 2017 will be increases in the maximum civil penalties applicable to breaches of civil penalty provisions of the Fair Work Act.

The maximum civil penalties will increase as follows:

  • for corporate contravenors – from $54,000 per breach to $63,000; and
  • for individual contravenors – from $10,800 per breach to $12,600.

Civil penalty provisions within the Fair Work Act include those relating to:

  • compliance with the National Employment Standards, modern awards and enterprise agreements;
  • protection of workplace rights and other employee protections;
  • rights of entry, and
  • industrial action.

The increases will only affect contraventions that occur on or after 1 July 2017. Prior contraventions

will attract the penalties applicable when they occurred.

Key tax rate and threshold changes

The key tax rate and threshold changes are summarised in the following table:

Employment termination payments (ETP) 

  • The ETP cap for life benefit and death benefit termination payments will increase to $200,000 (up from $195,000 in the 2016/17 income year).

  • The amount up to the ETP cap is taxed at a concessional rate and the amount in excess of the ETP cap is taxed at the highest marginal rate.

Genuine redundancy payments
Tax free amount

  • The new base limit is $10,155 and the amount for each completed year of service is $5,078.

  • This is an increase from the 2016/2017 base amount of $9,936 and $4,969 for each completed year of service.

Superannuation guarantee contributions
contribution base

  • The superannuation guarantee charge percentage will remain at 9.5 percent.

  • The maximum contribution base is now $52,760 per quarter. An employer is not required to provide superannuation support for its employees for the part of earnings above this limit, although, may have a contractual obligation to make additional contributions.

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