On 6 June 2017, Fair Work Australia ("FWA") handed down its Annual Wage Review¹ under the Fair Work Act 2009 (Cth) ("Act"). This increase is effective from the first full pay period on or after 1 July 2017.
Increases to Modern Award and Transitional Instruments
FWA has adopted a uniform percentage increase of 3.3%, with weekly wages being rounded to the nearest 10 cents. This increase will be applied to each Award level as applicable, rather than a flat dollar amount increase.
This increase will apply to:
- Modern Awards ("Award");
- Transitional APCSs (pay scales);
- State Reference Transitional Awards; and
- Division 2B State enterprise awards.
National Minimum Wage
The national minimum wage will be increased to $18.29 per hour, or $694.90 per week. This rate has been calculated on the basis of a 38 hour week for a full-time employee. This is an increase of $22.20 per week.
The standard casual loading in Awards remains at 25%. However, transitioning to this amount from a lower casual loading will continue to apply where applicable. The casual loading for Award/Agreement Free Employees will remain at 25%.
Most Awards require transitioning from 1 July each year in accordance with the transitional provisions of the Award. Please note the effective date for the purpose of transition is different to that of the adjustment to the minimum wage.
The date of transitional change is a lawful entitlement and the employer is technically obliged to pay from that date regardless of the inconvenience that it may create. From a practical perspective, employers may consider making a sole adjustment incorporating both the wage increase and any transitional change effective from the same date. We recommend if an employer chooses this option that it applies the earlier date being 1 July 2017.
Effect of Decision
Most Awards allow absorption of the Award's monetary obligations into over award payments. If this is the case, you may be able to absorb the increase into any over award payments. We recommend that you seek advice before making a decision to absorb the increase.
The increase may also affect employers covered by enterprise agreements or transitional agreements that are expressly linked to an Award or where the minimum rate of pay in the agreement falls below the equivalent minimum rate in the Award. Again, we recommend that you seek advice about your obligations.
Working Holiday Makers (Backpacker Tax)
From 1 January 2017, tax rates for working holiday makers who hold 417 and 462 visas were changed. To check whether one of you employees holds one of these visas, with their permission, you can visit border.gov.au/vevo and use the Visa Entitlement Verification Online Service.
If you employ a working holiday maker in Australia you will need to:
- Register with the ATO to withhold at the working holiday maker tax rate
- Withhold tax at 15% on income up to $37,000 and apply foreign resident tax rates on income above this amount
- Issue two payment summaries this year. One for the period 1 July 2016 to 31 December 2016. The Second from 1 January 2017 to 30 June 2017
For assistance with any of the above, please contact your Brentnalls SA team member.
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