Wage, workplace changes to consider

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It is important to review staff wages regularly, especially at the start of the new financial year for those on awards.

The Fair Work Commission (FWC) sets a minimum wage for private sector employees, which is subject to any applicable industrial award.  In the legal services industry, this is the Legal Services Award 2020. 

The FWC minimum wage panel handed down its annual wage review decision on 2 June and decided to:

• increase all modern award rates by 5.75 per cent (the rise last year was 4.6 per cent);
• effectively increase the National Minimum Wage on a one-off basis by $70.20 (8.6 per cent) per week.

The reason for the difference between the award and national minimum wage increases is the FWC decided the National Minimum Wage should not be tied to the C14 wage rate in modern awards which is the lowest, minimum wage rate. 

The FWC said this rate was only intended to be a transitional entry rate for new employees and was not a proper minimum wage safety net for award/agreement free employees in continuing employment.

In reaching their decision, the Fair Work Commission considered:

• the significant impact of current inflation rates on the ability of employees to meet their basic financial needs;
• the recent robustness of the labour market;
• that the increase would provide a disproportionate benefit to female workers and may contribute to narrowing the gender pay gap;
• moderating factors included the forthcoming increase in the SGC rate to 11%, the effect of the expected weakening in the labour market on casual employees and the need to avoid a perceived wage indexation approach along with recent weak productivity growth.

The National Minimum Wage and award rate increases will take effect from the first full pay period on or after 1 July 2023.  This means that the federal, weekly, minimum, full-time wage will increase from 1 July 2023 from $812.60 per week ($21.38 per hour) to $882.80 per week ($23.23 per hour). 

Increases to the minimum rates contained in the Legal Services Award 2020 will take effect from the start of the first full pay period on or after 1 July 2023. 

A summary of the Fair Work Commission’s decision can be found at https://www.fwc.gov.au/documents/resources/2023fwcfb3501.pdf.    Employers should check the Fair Work Commission website for pay rate revisions to the Legal Services Award 2020 at https://www.fwc.gov.au/agreements-awards/awards/find-award.

Employers and employees can also subscribe to electronic award updates from the Fair Work Commission. The Fair Work Ombudsman also has online pay checking resources – www.fairwork.gov.au/pay-and-wages.

Remember employees cannot be paid less than required by an applicable modern award (including overtime, penalty rates and allowances).

It is only trainees, apprentices and junior employees, employees to whom training arrangements apply and employees with a disability who may be paid less than these minimum rates and then only if specified in an applicable award or enterprise agreement.

For non-award employees, the obligation is for employers to ensure an employee is being paid more than the minimum wage rate for all their hours of work.

Care needs to be taken in relation to annualised wage and common law salary arrangements to ensure they comply with award and legal requirements. 

A failure to apply the minimum wage increase can result in a claim for back pay (covering up to the last six years) and the imposition of a penalty for breaching the industrial award (up to $16,500 for individuals and $82,500 for corporations per breach) and also has potential professional conduct implications.  Higher penalties (up to $165,000 for individuals and $825,000 for companies) are payable for certain serious contraventions. 

Also, from 1 July 2023, the compulsory employer Superannuation Guarantee rate will increase from 10.5 per cent to 11 per cent. 

Apart from increases to minimum award wage rates, practitioners should note the following award variations to the Legal Services Award 2020 over the last year:

1. the requirement for unpaid pandemic leave in Schedule X has been deleted from 15 July 2022;
2. provisions relating to part day public holidays have been moved to the general overtime clause 20;
3. clause 26 relating to unpaid family and domestic violence leave has been deleted due to its replacement by specific provisions (including for paid leave) in the National Employment Standards;
4. clause 22.7 relating to directions to take annual leave during a shutdown has been re written in plain language terms.

The other change that occurs each year from 1 July is an adjustment in the income level for statutory unfair dismissal claims which may be relevant when considering terminating the employment of a professional staff member. 

This year, the unfair dismissal high income threshold has increased to $167,500 (excluding superannuation and non guaranteed amounts, eg bonuses) from 1 July and the maximum compensation available for unfair dismissal increased to $83,750. 

This reinforces the importance for employers of making a decision whether to retain an employee before the deemed statutory probation period (called the “minimum employment period”) ends.  This period is 12 months for employers with less than 15 employees and 6 months for those employers with 15 or more employees.  These periods cannot be extended, even by agreement. 

Practitioners are also reminded about other workplace changes which are now operational or will shortly apply:

Pay secrecy

From 7 December 2022, pay secrecy has been effectively prohibited and new employees have a workplace right to disclose pay information.  This extends to wage or salary rates, working hours information, commission rates, bonus criteria (including key performance indicators – KPIs) and fringe benefits such as motor vehicles.  Pay secrecy clauses in new contracts are prohibited from 7 June 2023.

Paid family and domestic violence leave

From 1 February 2023, employees (including part-time and casual employees) can now access 10 days of paid family and domestic violence leave in a 12-month period at their full pay rate.  For small business employers (with less than 15 employees), the change will take effect from 1 August 2023. 

This requirement replaces the current entitlement to five days of unpaid family and domestic violence leave under the National Employment Standards.  While the full amount is immediately available, it does not accumulate from year to year.  The entitlement will renew on the anniversary of employment for existing employees.  There are also rules about how information about family and domestic violence leave must be reported on pay slips. 

Employees can take this paid leave if they need to do something to deal with the impact of family and domestic violence.  This could include the employee making arrangements for their safety, or the safety of a close relative (including relocation), attending court hearings, accessing police services, attending counselling and attending appointments with medical, financial or legal professionals.

Sexual harassment

From 6 March 2023, employees have been able to make application to the Fair Work Commission (FWC) for orders to stop sexual harassment in connection with work that occurs after that date.  There are also new avenues for complainants to claim compensation and penalties for workplace related sexual harassment.

Flexible work arrangements

From 6 June 2023, the FWC has been able to hear and determine disputes about flexible work requests and requests for extension of unpaid parental leave.

Increase in small wage claims cap

From 1 July 2023, the amount that employees can claim for wages and entitlements through small claims process will increase from $20,000 to $100,000 making it easier for employees to bring legal claims.

Fixed term contracts

From 6 December 2023 (with limited exceptions), employers will not be able to use fixed term contracts for the same role beyond two years or two successive contracts and will have to provide Fixed Term Contract information statements to employees.  The FWC will also have power to deal with fixed term contract disputes and there will be penalties for breaches.

There are more proposed changes in the second half of the year with the government starting consultation on:

• Equal pay for labour hire workers; 
• Changing the definition of casual employment to reflect the substance of the relationship rather than the form;
• Expanding FWC powers to deal with gig workers;
• Criminalising wage theft at a federal level;
• Allowing all workers to sue directly to recover superannuation contributions;
• Introducing a low cost jurisdiction for the FWC to deal with unfair contract disputes for independent contractors.

The above summary is far from exhaustive and is general in nature.

Rob Stevenson is the Principal of Australian Workplace Lawyers and a QLS Senior Counsellor. rob.stevenson@workplace-lawyers.com.au.