It’s a Numbers Game: are You Aware of These Changes?
Employers will be required to account for workplace changes which took effect on 1 July 2013.
From 1 July 2013, the superannuation guarantee levy will be 9.25%, which is an increase of 0.25% from the previous year.
This means that:
(a) if an employer had originally agreed to paying an employee’s salary or wages inclusive of superannuation (in other words, a fixed sum), then the superannuation component of the employee’s total package would increase by 0.25%. The total amount paid by the employer however, would remain the same; and
(b) if an employer had originally agreed to paying an employee’s salary or wages exclusive of superannuation (in other words, ‘plus’ superannuation), then the employer would need to make an increased payment for superannuation. In this instance, the total amount paid by the employer would increase by 0.25% of the non-superannuation component.
The increase is in annual increments and follows the scale set out below. This schedule may change depending on the outcome of this year’s election.
Additionally, from 1 July 2013, fund providers will be permitted to set up a new type of account called “MySuper” which will have low fees and simple features and will replace current default accounts chosen by employers. From 1 January 2014, employers will be required to make contributions into a fund that offers a MySuper account where an employee has not completed a Standard Choice form.
Another superannuation change which commenced on 1 July 2013 is that employers must now make superannuation guarantee payments for employees over 70 years of age.
A 2.6% increase to all modern award rates applies from 1 July 2013. As a result of this decision of the Minimum Wage Panel of the Fair Work Commission, the national minimum wage for the 2013/14 Financial year is $16.37 per hour, or $622.20 per week for a 38 hour week. This represents an increase of $15.80 to the minimum weekly wage.
Separately, the default casual loading for employees not under any award or agreement increased from 23% to 24%. Employees covered under award arrangements continue on the standard 25% loading.
Employers must ensure that these increases are duly passed onto all employees.
Unfair Dismissal Remuneration Cap
From 1 July 2013, employees who earn in excess of $129,300 p.a. are prevented from bringing unfair dismissal applications unless they are covered by an enterprise agreement or modern award. The maximum compensation for unfair dismissal claims is half the amount of the high income threshold, being $64,650 (up from $61,650 in 2012).
Taxation of Genuine Redundancy Payments and Employee Termination Payments
In the 2012/2013 Financial year, a genuine redundancy payment was tax- free up to a $8,806 base amount plus a $4,404 service amount multiplied by the number of years of service. For the 2013/14 Financial Year, these amounts become $9,246 and $4,624 respectively.
For Employment Termination Payments (‘ETPs’) more generally, if a person has reached “preservation age” in the income year their employment is terminated, the maximum tax rate is 16.5% (including Medicare levy) up to a cap. If a person has not reached “preservation age”, the maximum tax rate is 31.5% (including Medicare levy) up to a cap amount.
The concessional tax treatment is limited to the smaller of the “ETP cap” ($180,000 for 2013/14, indexed annually) and the “whole of income” cap ($180,000 and not indexed). The cap is reduced by other taxable payments an employee receives in the income year, such as salary. ETP amounts paid in excess of these caps are taxed at the top marginal rate (plus Medicare levy) of 46.5%.
Fair Work Amendment Bill 2013
This legislation was passed on 28 June 2013 and implements some further recommendations of the Fair Work Act Review Panel’s report from 2012. Some key amendments include:
Workers who are bullied at work will, as of 1 January 2014, be able to apply to the Fair Work Commission (“FWC”) for an order to stop the bullying. Notably, the FWC is required to start dealing with such an application within 14 days of the application being made. The FWC will be entrusted with powers to make a wide range of orders to prevent the bullying from continuing – but this does not include orders for compensation or reinstatement.
Flexibility for Working Families
There have been a number of changes introduced to the Fair Work Act concerning employees with family and caring responsibilities. These changes regarding special maternity leave, parental leave and right to flexible work commenced on 1 July 2013. Employers will need to ensure that special maternity leave taken will not reduce an employee’s entitlements to unpaid parental leave. The right to request flexible working arrangements has also been extended to a number of other employee categories including employees who are parents or carers, aged over 55 years, or have a disability. Effective as of 1 January 2014, employers will need to consult with their employees about the impact of changes to regular rosters or hours of work.
When employees have family and caring responsibilities, employers are also required to consult with them about the impact of changes to their regular roster or hours of work.
Union Right of Entry
As of 1 January 2014, unions will be able to meet with employees in the lunch rooms of their employers to conduct interviews or hold discussions in accordance with conditions of their entry permit. If there are disputes concerning this, the FWC now has the capacity to deal with this (and regulate the frequency of visits for such discussions).
Where the parties cannot reach agreement on transport and accommodation arrangements for permit holders in remote areas, the FWC may also now facilitate resolution of these disputes.