Legislation update

Round up of key employment law and tax changes for the 2021/2022 financial year

Andrew Tobin, Simon Clayer, and Catherine Nufer-Barr / 05 July 2021
8 min.
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Worthwhile read for: Business owners, HR professionals, Payroll officers

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

In this article, our Workplace and employment and Taxation teams have summarised the significant changes that employers need to be aware of. Depending on your individual circumstances, immediate action may be required from 1 July 2021 to ensure ongoing regulatory compliance.


Increases to minimum wage rates for national system employers

In accordance with the 2021 annual wage review decision of the Fair Work Commission (FWC), the following changes take effect to minimum wages from the first full pay period on, or after, 1 July 2021.

All modern award rates of pay will increase by 2.5 percent, however the FWC has determined there are “exceptional circumstances” justifying the staggering of this increase in award rates. Accordingly, the increase will apply in three stages:

  • Stage 1 — from 1 July 2021;
  • Stage 2 — from 1 September 2021; and
  • Stage 3 — from 1 November 2021.

A list of which awards fall into the respective groups can be found on the Fair Work Ombudsman’s website

The increase in wages has been staggered by the Fair Work Commission to assist those industry sectors that continue to experience the ongoing economic impacts of COVID-19. Relevantly, Stage 3 covers sectors such as the airline, hospitality and live performance industries which have been most adversely affected by the pandemic.

From 1 July 2021, the national minimum wage for adults working full time (38 hours per week) will increase from $753.80 to $772.60 (an increase of $18.80 per week).

The national minimum hourly rate for permanent national system employees will increase from $19.84 to $20.33 per hour (an increase of 49 cents per hour).

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 above new rates provide for a higher increase than last year’s increase of 1.75 percent. 

In making the decision to increase the national minimum wage and minimum award wages by a greater percentage than that awarded in the 2019-2020 annual wage review, the Fair Work Commission had regard to the following factors:

  • the current performance of the economy which has exceeded previously forecasted expectations;
  • the superannuation guarantee rate increase of 0.5% on 1 July 2021; and
  • Government support measures for low-income households such as the low and middle income tax offset and an increase in the Medicare levy low-income thresholds for singles, families and seniors.

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. 

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Changes to minimum wage rates for Western Australian system employers

For those employers in Western Australia who are outside the national system, effective from 1 July 2021:

  • the minimum wage will increase from $760.00 to $779.00 per week (the Western Australia minimum wage will be $6.40 per week higher than the national minimum wage); and 
  • all Western Australia State award rates will increase by 2.5%

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

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Changes to unfair dismissal protection thresholds

The Fair Work Commission has announced the high-income threshold for the purposes of the Fair Work Act will increase from $153,600 to $158,500 from 1 July 2021. 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 (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 $79,250 (i.e., half the new high-income threshold and up from $76,800) (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 (s.47 and 329 of the Fair Work Act).

Western Australia imposes a separate “maximum salary level” for lodging unfair dismissal claims. The level as at 1 July 2021 is $176,900. The current figure is available on the Western Australian Industrial Relations Commission website.

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New 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 2021. It can be accessed on the Fair Work Ombudsman’s website.

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 has information on:

  • leave entitlements;
  • maximum hours of work;
  • termination and entitlements;
  • redundancy pay;
  • 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.

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New Casual Employment Information Statement

The Fair Work Ombudsman has published the latest version of the Casual Employment Information Statement, which can be accessed on their website.

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

In accordance with the recent casual employee reforms (see our article here), small business employers (those with fewer than 15 employees) are required to give their existing casual employees (employed before 27 March 2021) a copy of the statement as soon as possible. All other employers have until 27 September 2021 before they are required to provide the statement to existing casual employees who were hired prior to 27 March 2021.

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.

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Civil penalties

The maximum civil penalties applicable to breaches of civil penalty provisions of the Fair Work Act have remained unchanged since the 2019/2020 financial year. As at 1 July 2021 the maximum penalties are:

  • for corporate contravenors — $66,600; and
  • for individual contravenors — $13,320.

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.

These penalties only affect contraventions that occur on or after 1 July 2020. Prior contraventions will attract the penalties applicable when they occurred.

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Key tax rate and threshold changes

The key tax rate and threshold changes for the 2021/22 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 $225,000 (up from $215,000 in the 2020/21 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.

Genuine redundancy payments

Tax-free amount

  • The new base limit for the 2021/22 income year will be $11,341 and the amount for each completed year of service will be $5,672.
  • This is an increase from the 2020/21 base amount of $10,989 and $5,496 for each completed year of service.

Superannuation 

Superannuation guarantee contributions

  • The superannuation guarantee charge percentage will increase to 10% from 1 July 2021 (up from 9.5% in the 2020/21 income year).

Maximum contribution base

  • The maximum contribution base will increase to $58,920 per quarter (up from $57,090 per quarter in the 2020/21 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.

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For more information, please contact our Workplace and employment or Taxation teams.

Authors
Andrew Tobin
Partner
Andrew is a Partner and the head of HopgoodGanim Lawyers’ Workplace and Employment practice.
Simon Clayer
Senior Associate
Simon Clayer is a senior practitioner in our Workplace and Employment practice. 
Catherine Nufer-Barr
Senior Associate
Catherine is a Senior Associate in our Taxation practice and a Chartered Tax Advisor.

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