Is your business ready for the new financial year?

By Gabrielle Stannus

Following the Annual Wage Review 2022, Australia’s national workplace tribunal, the Fair Work Commission (FWC) has announced increases to the National Minimum Wage and award minimum wages effective as of 1 July 2022. The Australian Taxation Office (ATO) is removing the superannuation guarantee threshold and increasing the superannuation guarantee rate.

The FWC has announced that the National Minimum Wage will increase by 5.2%, which amounts to $40 a week. Award minimum wages will increase by the greater of $40 per week or 4.6% based on a 38-hour week for a full-time employee¹. The effect of this staggered approach is that where the weekly wage is less than $869.60, the worker gets a $40 per week increase and where the wage is greater than $869.60 per week the worker gets a 4.6% increase.

The changes will take effect from (the first pay period after) 1 July 2022. This means that if your business has a weekly pay period that starts on Mondays, the new rates will apply from Monday 4 July 2022.

How will this change affect your employees?

The FWC’s decision in the Annual Wage Review will increase the minimum rates in the Nursery Award in the following way:

An employee earning less than $869.60 per week will receive a flat $40 increase per week. Employees that earn above $869.60 will receive a 4.6% wage increase per week.

Therefore, employees currently classified as Grade 1A to Grade 3 according to the Nursery Award will receive a flat $40 increase per week. For example, a Grade 1A employee who is currently on a $772.60 weekly wage² will be given an extra $40 per week after 1 July 2022, making their new weekly wage $812.60.

An employee currently classified under the Nursery Award as Grade 4 or above will receive a 4.6% increase to their weekly wage. Therefore, a Grade 4 employee currently on a weekly salary of $899.50³ will receive a 4.6% wage increase ($41.38) making their new weekly wage $940.88.

Revised awards

The following awards should be available online from 1 July 2022, except for the Hospitality Award. The Commission concluded that the aviation, tourism, and hospitality sectors were lagging in the COVID-19 recovery and so changes to Awards in those sectors will be delayed until 1 October 2022.

• Nursery Award
• Horticulture Award
• General Retail Industry Award
• Hospitality Industry (General) Award (changes delayed until 1 October 2022)

The last two awards on this list may be of relevance to retail nurseries and garden centres employing workers to sell non-greenlife products such as giftware, or preparing and/or serving meals, snacks and/or drinks in nursery cafes.

National Minimum Wage increase

The National Minimum Wage applies to employees not covered by an award or registered agreement.

From 1 July 2022, the National Minimum Wage will increase by $40 per week, which amounts to an increase of 5.2%.

The new National Minimum Wage will be $812.60 per week or $21.38 per hour.

Changes to superannuation from 1 July 2022

In addition to an increase in minimum wages, there are changes to superannuation (super) you should know about taking effect from 1 July 2022. This includes the:

• Removal of the $450 super guarantee threshold 
• Increase in the super guarantee rate from 10% to 10.5%

NB. The advice provided in this article is of a general nature only. Please contact the Fair Work Ombudsman or the Australian Taxation Office (ATO) or speak to a registered tax professional about your unique business or personal circumstances.

References

1. Fair Work Ombudsman 2022, 'Get set for a minimum wage increase', updated 16 June 2022, viewed 28 June 2022, https://www.fairwork.gov.au/newsroom/news/get-set-for-a-minimum-wage-increase
2. Fair Work Commission 2022, '15. Minimum rates', Nursery Award 2020, viewed 28 June 2022, https://asset.fwc.gov.au/documents/documents/modern_awards/award/ma000033/default.htm  
3. Fair Work Commission 2022, '15. Minimum rates', Nursery Award 2020, viewed 28 June 2022, https://asset.fwc.gov.au/documents/documents/modern_awards/award/ma000033/default.htm