Date: June 25, 2021
The Fair Work Commission (FWC) has handed down its decision on minimum pay, providing an increase of 2.5% to the national minimum wage and minimum modern award rates. The increase to the national minimum wage is effective from 1 July 2021. The increase to modern awards takes effect on different dates for different awards due to the impact of COVID-19.
The superannuation guarantee rate is 10% effective from 1 July 2021. The superannuation rate is currently scheduled to progressively increase to 12% by July 2025.
The high income threshold is $158,500 effective from 1 July 2021.
ISSUE 1: 2.5% INCREASE TO AUSTRALIAN NATIONAL MINIMUM WAGE AND MODERN AWARD RATES
The FWC has granted a 2.5% increase to the national minimum wage and the minimum pay rates under modern awards. The weekly minimum wage is $772.60 per week, or $20.33 per hour, with effect from 1 July 2021. The national minimum wage will apply to any employee who is not covered by a modern award. The pay increase in modern awards will take effect on different dates for different awards.
The increases to the pay rates in the General Retail Industry Award 2020 will come into effect from the first full pay period on or after 1 September 2021.
The increases to the pay rates in the following modern awards will come into effect from the first full pay period on or after 1 November 2021:
- Air Pilots Award 2020;
- Aircraft Cabin Crew Award 2020;
- Airline Operations – Ground Staff Award 2020;
- Airport Employees Award 2020;
- Airservices Australia Enterprise Award 2016;
- Alpine Resorts Award 2020;
- Amusement, Events and Recreation Award 2020;
- Dry Cleaning and Laundry Industry Award 2020;
- Fitness Industry Award 2020;
- Hair and Beauty Industry Award 2010;
- Hospitality Industry (General) Award 2020;
- Live Performance Award 2020;
- Mannequins and Models Award 2020;
- Marine Tourism and Charter Vessels Award 2020;
- Nursery Award 2020;
- Racing Clubs Events Award 2020;
- Racing Industry Ground Maintenance Award 2020;
- Registered and Licensed Clubs Award 2020;
- Restaurant Industry Award 2020;
- Sporting Organisations Award 2020;
- Travelling Shows Award 2020; and
- Wine Industry Award 2020.
The increases to the pay rates in all other modern awards will come into effect from the first full pay period on or after 1 July 2021.
ISSUE 2: INCREASE TO MINIMUM AUSTRALIAN SUPERANNUATION CONTRIBUTIONS
The new minimum superannuation guarantee contribution rate of 10% must be applied for salary and wage payments (which constitute “ordinary time earnings”) made on or after 1 July 2021. For high-earning employees, the maximum superannuation contribution base is $58,920 per quarter with effect from 1 July 2021. Employers are not statutorily required to provide superannuation contributions on an employee’s earnings in excess of the superannuation contribution base. However, employers should check any relevant employment contracts.
Where employees receive a global remuneration package inclusive of superannuation, it might be possible for an employer to reduce the employees’ salaries in parallel with the increase in superannuation contributions. However, the relevant employment contracts (and / or the effect of any implied terms) should be very carefully considered before employers take any such action.
The superannuation contribution rates will be as follows:
- From 1 July 2021 – 10%;
- From 1 July 2022 – 10.5%;
- From 1 July 2023 – 11%;
- From 1 July 2024 – 11.5%;
- From 1 July 2025 – 12%.
ISSUE 3: INCREASE TO HIGH INCOME THRESHOLD
The high income threshold is $158,500 with effect from 1 July 2021. This is relevant to the issue of whether an employee is able to make an unfair dismissal claim and when they can, it imposes a cap on potential compensation. Where an employee earns above the high income threshold (and they are not covered by an award or enterprise agreement) the employee may not pursue an unfair dismissal claim against their (previous) employer. The unfair dismissal compensation cap is $79,250 from 1 July 2021.
Whilst the terms of the employee’s contract of employment and any binding policies (if relevant) will require immediate consideration where employers are considering the termination of employment of employees earning in excess of the high income threshold, it will also be appropriate to properly assess whether an award or enterprise agreement applies before any steps are taken in relation to termination of employment.
The high income threshold is also relevant to any guarantee of annual earnings. In relation to award-covered employees with an annual rate of earnings in excess of the high income threshold, an employer can exclude award conditions in relation to that employee by providing them with a guarantee of annual earnings in accordance with the Fair Work Act 2009 (Cth).
Please contact us if your business requires assistance with employment law or industrial relations matters.
Whitehall Workplace Law
Level 14, 330 Collins Street, Melbourne, VIC 3000
This publication is for general reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice should always be obtained before taking any action based on this publication.
Liability limited by a scheme approved under professional standards legislation.