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HG Employment Alert: Round up of key employment law and tax changes for the 2014/2015 financial year 2 July 2014

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

We have produced the following summary of the significant changes about which employers should now be aware.  Depending on your individual circumstances, they may require immediate action to ensure ongoing regulatory compliance.

In this Alert, Senior Associates Rosalie Cattermole and Damon King and also Solicitor Claire Tuffield provide a brief snapshot of a number of significant developments in this space.

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

In accordance with the 2014 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 2014:

  • All modern award rates of pay have increased by 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) increased from $622.20 to $640.90 (an increase of $18.70 per week).
  • The national minimum hourly rate for permanent national system employees increased from $16.37 to $16.87 per hour (an increase of 50 cents per hour).
  • The default casual loading for award/agreement free casual employees increased from 24 percent to 25 percent.  The minimum hourly rate for casual employees to whom a modern award applies will continue to be subject to the modern award standard casual 25 percent loading.

The above changes apply to all workers in the national system including juniors, apprentices, trainees, differently-abled employees and those paid under piecework arrangements.

A number of transitional or phasing in arrangements from state award based rates to modern award rates of pay cease to apply from 1 July 2014 and instead, the relevant rates of pay are simply those outlined in the applicable modern award.

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 Western Australia outside the national system, effective from 1 July 2014 the minimum wage increased to $665.90 per week (i.e. the WA minimum wage is $25.00 per week higher than the national minimum wage). 

In the WA private sector, this change affects employers who are not incorporated, such as sole traders and partnerships of individuals.

Changes to the high income threshold and federal unfair dismissal jurisdiction

The high-income threshold for the purposes of the Fair Work Act increased from 1 July 2014 to $133,000 per annum (up from $129,300).  

This means that employees, who are not covered by an award or statutory workplace agreement, do not have access to the federal unfair dismissal jurisdiction if their annual rate of earnings exceeds $133,000 from 1 July 2014.

This change also:

  • means that the maximum compensation which might be awarded by the Fair Work Commission for a successful unfair dismissal claim has increased to $66,500 (i.e. half the new high income threshold and up from $64,650); and
  • may affect the continued non-application of awards and award entitlements to high income employees whose industrial arrangements incorporate a guarantee of annual earnings at a level which is intended to exceed the high-income threshold.

Key tax rate and threshold changes

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

Employment termination payments (ETP)

ETP cap

  • The ETP cap for life benefit and death benefit termination payments has increased to $185,000 (up from $180,000 in the 2013/2014 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 $9,514 and the amount for each completed year of service is $4,758
  • This is an increase from the 2013/2014 base amount of $9,246 and $4,624 for each completed year of service

Superannuation

Superannuation guarantee contributions

Maximum contribution base

 

  • The superannuation guarantee charge percentage is 9.5 percent
  • This is an increase from the 9.25 percent that applied for the 2013/2014 income year
  • The maximum contribution base is now $49,430 per quarter.  An employer is not required to provide superannuation support for its employees for the part of earnings above this limit.  Although, an employer may have a contractual obligation to make superannuation guarantee contributions for the total amount of an employee’s ordinary time earnings

For more information about the changes to be introduced, please contact HopgoodGanim’s Industrial and Employment Law and Tax teams.