A little while ago we covered the importance of ensuring legal compliance through meeting your Fair Work obligations as a business, which you should take a look at if you haven’t already. The Fair Work Commission recently released the results of their annual review of the national minimum wage, announcing that a 3.3% increase to the minimum wage will apply from the first full pay period starting on or after 1 July 2017.
The other change that is due to start on the 1 July 2017 is the phasing in of the widely-publicized decreases to penalty rates across the Fast Food Industry Award, the Restaurant Industry Award, the General Retail Industry Award, the Hospitality Industry (General) Award and the Pharmacy Industry Award.
You would definitely be forgiven for being confused about how you should be paying your employees when the financial year ticks over in July this year, and if you are in any doubt, you should call an industrial relations lawyer or Fair Work to be confident that your business is compliant. To give you an overview however, we’ve put together an outline of how the 1 July changes will affect your business.
1 – Changes to Minimum Wage
Beginning 1 July 2017, all employees that are currently on the minimum wage within their award will receive a pay increase of 3.3%. The increase applies to everybody who gets their pay rate from a modern award or using the national minimum wage, so unless you are currently paying your employees 3.3% above the current minimum wage as per their award already, you will need to apply the increase.
If you need help calculating the new hourly rate of pay for your employees, the Pay and Conditions Tool (PACT) by Fair Work might come in handy.
If you are currently already a Deputy customer, this means all you need to do is change the base rate for your employees, and we will keep doing the heavy lifting around penalty rates, overtime, breaks and loading to make sure that you stay Fair Work compliant as we have always done.
2 – Changes to Penalty Rates
Back in February this year, the Fair Work Commission handed down a landmark decision to decrease penalty rates across a number of industries. While it was initially uncertain what exactly this will look like in practice, Fair Work have now released how the penalty rate changes will be implemented.
If you are an employer currently using any of the awards affected by the penalty rate changes, it should be noted that it is not mandatory to implement the new penalty rates for your employees, you can choose to continue paying the current rate (prior to 1 June 2017).
3 – Staying Compliant
With Fair Work also announcing an increase of random audits as part of a crackdown on compliance, it is vital that you are aware and up to date of these changes to the Fair Work regulations. To give you a quick recap again:
- There has been a 3.3% increase to the minimum wage, which applies across all industry awards – the base rate for all employees on minimum wage needs to be increased by 3.3% by the first pay period on or after 1 July 2017.
- Some awards will be affected by the new changes to penalty rates which will begin on the 1 July 2017 – if you are choosing to adopt the new penalty rates, you need to make sure that you know how the new rates are being implemented to ensure that you stay compliant.
- If you are currently part of an EBA or any other award alternative, you need to double check that your agreement is still in alignment with these new changes, so that your employees are not at any disadvantage under their agreement.
4 – Help Is On The Way
There are a couple of nifty resources that can help crunch the new numbers on what the penalty rates will look like for your business, including this calculator from the ABC and the PACT tool we mentioned earlier from Fair Work.
For Deputy customers, as always, we will have you covered when it comes to compliance. Come 1 July, whether you choose to adjust to the new penalty rates or stay with the pre-2017 penalty rates, all you have to do is adjust your employee base rate to meet the new minimum wage requirements, select which version of the penalty rates you wish to apply, and we will take care of the rest.
We will have more information shortly on exactly how to do this so stay tuned!
5 – The break-down on penalty rates
Here’s everything you need to know about the changes to penalty rates beginning July 1 2017.
Retail Award (GRIA)
The Sunday penalty rate decreases in the GRIA will start to be phased in from 1 July 2017. For full-time and part-time employees, the current rate of 200% will be reduced to 150% by 1 July 2020, beginning with an initial reduction to 195% on 1 July 2017, while the rate for casual employees will be reduced from 200% to 175% by 1 July 2019, beginning with a decrease to 195% on 1 July this year.
The new Public Holiday rates for full-time and part-time employees effective as of 1 July 2017 will be from 250% to 225%, and for casual employees from 275% to 250%.
Fast Food Industry Award – Level 1 (FFIA)
Changes to the Public Holiday rate become effective immediately as of 1 July 2017. For full-time and part-time employees, this will be a drop from 250% to 225%, while the rate for casual employees will be lowered from 275% to 250%.
Additionally, the evening loading rate of 10% will apply from 10pm, instead of 9pm, while the 15% after midnight rate will apply for the hours worked until 6am.
Level 1 employees receiving the FFIA will have the reductions to their Sunday penalty rates phased in over a three-year period, with the first reduction effective as of the 1 July 2017.
For full-time and part-time employees, this means that the Sunday rate will be reduced from 150 to 145 % this year, and eventually to 125% by the 1 July 2019.
For casual employees, the Sunday rate will be reduced from 175% to 170% this year, to eventually become 150% at the 1 July 2019.
Restaurant Award (RIA)
There will be no changes to the existing Sunday penalty rates for employees being paid according to the Restaurant Award, however there will be changes to Public Holiday rates for full-time and part-time employees, who will both experience a decrease from 250% to 225% effective as of 1 July 2017.
From the 1 July 2017 also, the 15% after midnight penalty in the Restaurant Award will only apply for hours worked until 6am rather than 7am as it has been previously.
Hospitality Award (HIGA)
From the 1 July 2017, for full-time and part-time employees under this award the Public Holiday penalty rate will be dropped from 250% to 225%, and for casual employees from 275% to 250%.
There will be no change to Sunday penalty rates for casual employees being paid on the HIGA, however for full-time and part-time employees there will be a reduction that will be phased in over 3 years. Beginning the 1 July 2017, the Sunday rate will be reduced from 175% to 170%, to eventually become 150% in 2019.
Under the Pharmacy Award, the new Public Holiday rates to begin on 1 July 2017 will change from 250% to 225% for full-time and part-time employees, and from 275% to 250% for casuals.
The Sunday penalty rates that apply under this award will also change for employees working between 7am and 9pm, and is set to be phased in over a four-year period. The changed rate for full-time and part-time employees will go from 200% to 150% by 2020, beginning with a change to 195% on 1 July 2017. For casual employees, the final change will be from 225% to 275% by 2020, beginning with a decrease to 220% on 1 July 2017.
At Deputy, we are fully committed to making sure our customers are Fair Work compliant. If you would like some more information on how we can help, make sure to get in touch.