The start of the new financial year has brought about some important changes to employment laws.
All employers have a responsibility to remain up to date and aware of any amendments made to employment laws, to ensure that they remain compliant and continue to meet their obligations.
Below are four important changes that took effect from 1 July 2015:
Salary cap for unfair dismissal
The high income threshold increased from $133,000 to $136,700 per annum. Because the threshold includes allowances and benefits, employees and employers should remain aware of how salary packaging can affect their eligibility to meet the new requirements.
Recent unfair dismissal cases have demonstrated that even though an employee’s base salary may be below the high income threshold, any additional benefits can be classified as “earnings”. These earnings can push an employee’s base salary over the threshold, making them ineligible for unfair dismissal remedies (if they are not covered by an enterprise agreement or modern award).
Before dismissing a high income employee, employers need to be aware that employees who earn over the threshold may still have other legal avenues to challenge dismissals. These options include anti-discrimination laws and the Fair Work Act’s general protections provisions. Therefore, to protect themselves against any type of challenge, employers should take the necessary steps to understand their position before dismissing an employee.
The modern award minimum wage rates rose 2.5 per cent, and the National Minimum Wage increased to $656.90 per week (or $17.29 per hour) for employees who are not covered by an award or agreement. However, employers who employ staff that are not covered by any age or disability percentage rate are exempt from the change, and may pay less than the National Minimum Wage.
The changes bring about the need for employers to make sure that their rates do not fall below the new minimum wages rates. Even if their employees are already paid above the minimum wage or modern award rates, employers should review their rates nonetheless.
The same goes for any employees who are employed under an enterprise agreement. Employers should check that the base rates in their agreement remain at least equal to the new minimum Modern Award rates.
Employees should also check what their current pay rates are, and ensure that any applicable increases have been applied to their first full payslip for the period on or after July 1, 2015.
The maximum cap for superannuation contributions increased to $203,240 per annum. However, the Superannuation Guarantee rate will remain at 9.5 per cent until 30 June 2021, and will increase to 12 per cent by 1 July 2025.
The delay in an increase has significant financial implications for those expecting to remain in the workforce for more than 12 years. This is because the 3 per cent increase will take effect from the start of the 2025-26 year (in 12 years’ time (under the new laws), rather than in five years’ time (under former SG laws).)
Redundancy tax concessions
The tax free threshold that applies to genuine redundancy payments will increase, affecting employers with employees who are entitled to a redundancy payment. From 1 July 2015, the tax free base limit in a valid redundancy payment will increase to $9,780, and the tax free limit per year of service will increase to $4,891.