Legislation update

Round up of key employment law and tax changes for the 2023/2024 financial year

By Andrew Tobin / 28 June 2023

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

Our Workplace and Employment and Taxation teams have summarised the significant changes employers should be aware of. Depending on your individual circumstances, immediate action may be required from 1 July 2023 to ensure ongoing regulatory compliance.

Increases to minimum wage rates for national system employers

Modern award rates

In accordance with the 2023 annual wage review decision of the Fair Work Commission, all modern award rates of pay will increase by 5.75%.

This increase will commence from the first full pay period on, or after, 1 July 2023.

National minimum wage

From 1 July 2023, the national minimum wage for adults working full time (38 hours per week) has increased from $812.60 ($21.38 per hour) to $882.80 ($23.23 per hour). 

The casual loading for award/agreement free employees remains set at 25%, 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. 

It is imperative that all employers 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 2023:

  • the minimum wage has increased from $819.00 to $863.40 per week (i.e., the WA minimum wage will be $19.40 per week lower than the national minimum wage); and 
  • all WA State award rates will increase by 5.3%. 

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

Changes to unfair dismissal protection thresholds

The high-income threshold for the purposes of the Fair Work Act has, from 1 July 2023, increased from $162,000 to $167,500.

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 (s.382 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 $83,750 (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 has a guarantee of annual earnings exceeding the high income threshold (s.47 and 329 of the Fair Work Act).

Western Australia imposes a separate “maximum salary level” for lodging unfair dismissal and denied contractual benefit claims. From 1 July 2023, the level has increased from $181,400 to $187,800. The current figure may be accessed on the Western Australian Industrial Relations Commission website.

Fair Work Information Statement

The Fair Work Ombudsman has now published the latest version of the Fair Work Information Statement which applies from 1 July 2023. 

It is a requirement under s.125 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:

  • leave entitlements;
  • maximum hours of work;
  • termination and entitlements;
  • redundancy pay;
  • casual conversion;
  • requests for flexible working arrangements;
  • general protections;
  • agreements (including enterprise agreements and individual flexibility arrangements); and
  • union powers to enter the workplace.

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

Casual Employment Information Statement

The latest online version of the Fair Work Ombudsman’s Casual Employment Information Statement is available. 

It is a requirement under s.125B of the Fair Work Act that employers give casual employees, in addition to the Fair Work Information Statement, a copy of the Casual Employment Information Statement before, or as soon as practicable after, the employee commences employment.

The Casual Employment Information Statement informs employees about several matters, including:

  • the definition of a casual employee;
  • when an employer must offer casual conversion;
  • when an employer is not obligated to offer casual conversion;
  • when an employee can request casual conversion; and
  • resolving disputes about casual conversion.

Failure to give the Casual Employment Information Statement, or the current version of it, is a breach of the National Employment Standards and the Fair Work Act, attracting liability to a civil penalty.

Civil penalties

From 1 July 2023, the maximum civil penalties applicable to breaches of civil penalty provisions of the Fair Work Act are:

  • for corporate contravenors – $93,900; and
  • for individual contravenors – $18,780.

These penalties only affect contraventions that occur on or after 1 July 2023.  Prior contraventions will attract the penalties applicable when they occurred.

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.

Key tax rate and threshold changes

The key tax rate and threshold changes for the 2023/24 income year are summarised in the following table:

Employment termination payments (ETP)

ETP cap

  • The ETP cap for life benefit and death benefit termination payments will increase to $235,000 (up from $230,000 in the 2022/23 income year).

  • The amount up to the ETP cap is taxed at a concessional rate (17% or 32% based on whether the taxpayer has reached preservation age) and the amount in excess of the ETP cap is taxed at the highest marginal rate (currently 47%).

Whole-of-income cap    

  • The whole-of-income cap will remain at $180,000 as this is a non-indexed figure.

Genuine redundancy payments

Tax-free amount

  • The new base limit for the 2023/24 income year will be $11,985 and the amount for each completed year of service will be $5,994.

  • This is an increase from the 2022/23 base amount of $11,591 and $5,797 for each completed year of service.

Superannuation 

Superannuation guarantee contributions

 

  • The superannuation guarantee charge percentage will increase to 11% from 1 July 2023 (up from 10.5% in the 2022/23 income year).

  • All employees will be entitled to receive superannuation contributions, calculated using the superannuation guarantee percentage, regardless of how much they earn per month.

Maximum contribution base

  • The maximum contribution base will increase to $62,270 per quarter or $249,080 per year (up from $60,220 per quarter in the 2022/23 income year).

  • An employer is not required to provide superannuation support for its employees on any part of their quarterly earnings exceeding this limit, however, may have a contractual obligation to make additional contributions.

Concessional contribution cap
  • The concessional contribution cap applies to limit the amount of contributions which are taxed at the concessional superannuation rate of 15%.

  • Where the concessional contribution cap is exceeded, any excess concessional contributions amount must be included in a taxpayer’s assessable income and tax paid at their marginal tax rates.

  • Payments towards the concessional contribution cap include payments made by an employer (including contributions made under salary sacrifice arrangements) or personal contributions claimed as a tax deduction.

  • The concessional contribution cap for the 2023/24 year remains at $27,500.

For more information about the changes to be introduced, please contact HopgoodGanim Lawyers Workplace and Employment Law and Taxation teams.

 

Key Contacts
Andrew Tobin
Partner
Andrew is a Partner and the head of HopgoodGanim Lawyers’ Workplace and Employment practice.

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