Minimum Wage and Superannuation Increases: Are you ready?

As we approach the new financial year, Perth businesses must prepare for changes in wage rates that come into effect from July 1. The Fair Work Commission has announced an increase in the minimum wage, which will impact employers across all sectors. Understanding these changes and the consequences of underpayments is crucial for ensuring compliance and maintaining a fair workplace.

Minimum Wage Increase from July 1

Starting July 1, the national minimum wage will increase. Here are the key details:

• National Minimum Wage – The national minimum wage will increase to by 3.75% to $24.10 per hour. This translates to a weekly minimum wage of $915.91 per week for a full-time employee working 38 hours per week. An increase of $33 per week and will impact 20.7% of the nation's workforce
• Award Wages – In addition to the national minimum wage, award wages will also see an increase. This change affects various industry and occupation-specific awards, ensuring that employees covered under these awards receive appropriate pay rises

What do you need to do?

Perth business owners need to take proactive steps to ensure compliance. This guide outlines the necessary actions to meet the new wage requirements and avoid the consequences of underpayment.

Key Steps for Compliance

• Update Payroll Systems
  • Ensure that your payroll system is updated to reflect the new minimum wage rates and any relevant award increases
  • Check that all employee classifications are accurate and up-to-date
• Conduct Regular Audits
  • Perform regular payroll audits to ensure that employees are being paid correctly according to the new rates. This includes checking for correct application of overtime, penalty rates, and other entitlements
• Employee Awareness
  • Notify individual team members of any changes to their rate of classification prior to July 1, 2024. Transparency helps build trust and ensures that employees are aware of their entitlements
• Review Employment Contracts
  • Review and update employment contracts to ensure they reflect changes in award conditions. Make sure all terms and conditions are compliant with current legislation
  • Assess casual employees for eligibility for conversion to permanent employment, if applicable, and communicate their options clearly

Superannuation Guarantee Increase

In addition to the minimum wage increase, employers must also prepare for a rise in the superannuation guarantee (SG) rate. Here’s what you need to know:

• Superannuation Guarantee Rate – The superannuation guarantee rate will increase to 11.5% from the current 11%. This means employers must contribute an additional 0.5% of an employee's ordinary time earnings to their superannuation fund
• Impact on Payroll – This increase will affect payroll calculations and overall employment costs. Employers must ensure their payroll systems are updated to reflect the new SG rate to comply with the law

Consequences of Underpayments

Failing to comply with the new minimum wage rates can have serious consequences for SMEs, including:

• Financial Penalties – Employers who underpay their staff can face significant fines. The Fair Work Ombudsman can impose penalties of up to $16,500 per breach for individuals and up to $82,500 per breach for companies
• Back Payments – Employers found to have underpaid their employees will be required to back pay the owed wages, which can accumulate significant amounts, especially if the underpayments have been ongoing
• Legal Action – Underpaid employees can file complaints with the Fair Work Ombudsman, leading to investigations and potential legal action. This can result in costly legal fees and further financial liabilities
• Reputational Damage – Public knowledge of wage underpayments can severely damage a business's reputation, leading to loss of customers, difficulty in recruiting talent, and long-term brand damage

Conclusion

The increase in the minimum wage from July 1 places a responsibility on Perth businesses to comply with the new rates and avoid the severe consequences of underpayments. By proactively updating payroll systems, conducting audits, and educating staff, businesses can ensure compliance and foster a positive workplace environment.

By understanding and preparing for these changes in wage rates, businesses can support their employees and ensure they meet legal requirements, leading to a healthier, more motivated workforce and a stronger business overall.

Vitil Outsourced Human Resource Consultants

Vitil People Solutions is a boutique boutique HR consulting firm based across Perth. We offer flexible, reliable and affordable outsourced human resource support, people solutions and recruitment services, where your team is the key focus. Talk to our experienced professionals if you have any questions.

Contact us

Back to news headlines