Changes to employer’s obligations from 1 July: Are you ready?

With the end of the 2017 financial year fast approaching, legislative changes accompanying the new financial year are imminent.

There are several changes to employers’ obligations and employees’ rights that are coming into force on 1 July 2017.  These changes include:

• An increase in the national minimum wage; and
• Changes to penalty rates for certain industries.

As well as these changes, civil penalty rates will increase, which means employers will have to pay a higher sum if they are not complying with their obligations.

Minimum wage

On 6 June 2017, the Fair Work Commission announced a 3.3% increase in national minimum wages beginning on 1 July 2017.  This increase will apply to employees who are not covered by any award or agreement, and to employees who are covered by a modern award. 

This 3.3% increase will make the new weekly minimum wage $694.90 per week or $18.29 per hour.  The Commission said in their decision that this will affect over 2.3 million employees in Australia who are reliant on minimum rates of pay.

For employers who are still covered by the State system, the minimum wage will increase 2.3% to $708.90 per week or $18.66 per hour.

Penalty rates

The changes to penalty rates that the Fair Work Commission first announced in February of this year also come into force on 1 July 2017.  These changes affect employers and employees operating in the retail, pharmacy and hospitality industries.

Public Holiday rates

The Commission confirmed that changes to public holiday penalty rates will take full effect from 1 July 2017.  The changes are published in their decisions dated 23 February 2017 and 6 June 2017.  To view these changes click here.

Evening and after midnight work penalties

From 1 July 2017, the times for when evening and after-midnight penalties apply will change in the Fast Food Award and the Restaurant Award:

• In the Fast Food Award, the 10% evening work penalty will apply to hours worked between 10.00pm and midnight, and the 15% after midnight penalty will apply to hours worked between midnight and 6.00am; and
• In the Restaurant Award, the 15% after midnight penalty will apply to hours worked between midnight and 6.00am.

Civil Penalty increases

Penalty units are a legislatively determined amount of money used to calculate the pecuniary penalties for breaches of many different statutes.  Relevantly for employers, penalty units are used to calculate the amount of redress an employer must pay when they breach a civil penalty provision of the Fair Work Act 2009 (Cth) (FW Act).

The current valuation for a penalty unit, as provided in section 4AA of the Crimes Act 1914 (Cth), is $180.00.  The new Crime Amendment (Penalty Unit) Bill 2017, which takes effect from 1 July 2017, increases the value of a penalty unit to $210.00.

There are many provisions in the FW Act that attract a civil penalty.  These include:

• Contravening the national employment standards, a modern award, or an enterprise agreement (eg failing to provide the lawful amount of annual leave or paying an employee under the minimum rate of pay);
• Contravening provisions which relate to workplace rights, for example taking adverse action against an employee, coercing an employee, or discriminating against an employee;
• Contravening a general protection provision, for example terminating an employment for a discriminatory reason; and
• Contravening unfair dismissal orders.

At the moment, the maximum penalty for a single breach of the FW Act is $10,800.00 for an individual or $54,000.00 for a corporate entity.  However, after 1 July, this increases to $12,600.00 for an individual and $63,000.00 for a corporate entity.

Lavan comment

It is important for employers to ensure that they are at least complying with the new minimum wage that will be in place after 1 July 2017.  It is recommended that employment agreements be closely examined to ensure they are in accordance with these changes.

If an employer fails to pay its employees at or above the new minimum wage, they may face the increased civil penalties that have been discussed above: for a corporate entity, this can be up to $63,000 for a single breach.  

Employers should also assess how they can adjust their agreements to be in accordance with the new penalty rate requirements.

If you require assistance in ensuring your employment agreements are compliant with the upcoming changes, please contact Lavan’s Employment and Safety team.