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Minimum wage increase in Australia – 1 July 2019

Caitlin Meers

03 Jul 2019

Topics

  • Business Law
  • Employment Law

As part of its Annual Wage Review, the Fair Work Commission has increased minimum pay rates by 3% for the first full pay period on or after 1 July 2019. In this article Caitlin Meers explains why employers must make sure that they review their rates within their payroll systems and ensure that employees are being paid correctly in the first pay period the 2019–2020 financial year.

Pay guides

Employers can find a list of the pay guides, with the minimum pay rates updated, at this link here.

It’s critical that employers ensure they have categorised their employees correctly, including identifying the correct award and relevant level of pay required. This includes reviewing the age of the employee (if under 21) and obtaining information about all relevant qualifications, for example, vocational or tertiary qualifications.

Penalties

If employers do not correctly pay their employees, there can be flow-on effects, including the miscalculation of superannuation and leave loading.
Serious penalties can apply to employers who incorrectly pay their employees, including reparations payable to the affected employee (usually by way of back payment of salary and superannuation) and penalties under the relevant legislation. These penalties are often imposed on both the employer’s entity (if there is a company structure) and directors of the entity. This may expose the personal assets of the directors and cause significant financial hardship.

Employment categorisation

The minimum wage rise for 2019–2020 also provides an opportunity for employers to review its arrangements with employers and contractors, including to determine whether workers have been correctly categorised.

Where contractors are actually employees, employers will be expected to make allowances for superannuation, workers compensation and other entitlements, such as sick leave and annual leave.

Penalties can also apply to employers who miscategorise their employees and contractors, including penalties against the employer’s entity and directors of that entity.

How can we help?

Our Employment law team can help you with all aspects of employment and business law, including employment contracts, individual flexibility arrangements and audits of pay rates.