Just as business seemed to be getting back on its feet, the Delta strain of COVID-19 hit Sydney and the city was lockdown. Unfortunately, the lockdown began only a few days before the introduction of:
- Increases to the minimum wage
- Increases to super guarantee payments
With all the upheaval and uncertainty that came with the latest lockdown, these increases may have slipped your mind. So here is a summary of what you should be doing and some things you need to consider.
If you would like tailored advice to assist your business, please get in touch by calling 02 8977 4002.
1. Increases to the minimum wage
From July 1, the National Minimum Wage increased by 2.5% for all full-time, adult employees who are not covered by an award, apprenticeship or traineeship. This means the minimum wage is now $20.33 per hour or $772.60 per week.
To calculate the increase for your part-time employees, simply calculate their minimum wage according to the new hourly rate and the hours they work each week.
For casual employees, talk to us as it can be quite complicated, depending on the casual employee’s applicable Modern Award, Enterprise Agreement or other registered agreement.
Minimum wage increases are happening in 3 stages
Like last year, the minimum wage increase is being rolled out in 3 stages – according to your industry.
For most Awards, the 2.5% increase was payable from the first full pay period that commenced on or after 1 July 2021.
The Retail Award increase will begin from the first full pay period beginning on or after 1 September this year.
The final stage of the minimum wage increase will commence from the first full pay period on or after 1 November 2021. For a full list of Awards covered in this third stage, visit the Fair Work Ombudsman website.
Confused about when and who these minimum wage changes apply to?
When it comes to paying staff, you can’t play guessing games. The penalties for getting it wrong are too great. We are here to help you so get in touch with End2end Business Solutions by calling 02 8977 4002.
2. Increases to staff super contributions
The superannuation guarantee also increased by 0.5% from July 1. The new rate is 10% of an employee’s earnings.
This is the first increase to the super guarantee since 2014 and it could have a significant impact on the profitability of your business – especially now. But there’s more. The super guarantee is set to increase by a further 0.5% each year until 2025.
Your legal obligations
Regardless of your business’ ability to operate during the current lockdowns, you are required to pay the super guarantee to all employees who are over 18 years of age and earn at least $450 per month (although this will change in 2022).
Employees under 18 years may also be eligible if they work at least 30 hours per week.
The super guarantee applies to:
- Full-time, part-time and casual employees
- Company directors
- Any family members involved in the business
You may also be required to make super contributions to contractors if their labour is valued at more than half the total cost of the contract.
“Stapled super” is here
To avoid individuals holding multiple super accounts as they change employers, you are now required to pay all staff super contributions into their existing super (or “stapled super”) account. That means you will need to obtain information on a new employee’s existing super fund rather than automatically creating a new one whenever you hire new staff.
Plus Super or Super Inclusive
While all super contributions have increased since July 1, they may or may not be an additional expense to your business – depending on the terms of each employee’s salary package.
Some salary packages have super included as part of the total payment figure. If this is the case in your employee agreements, you can choose to pay the super guarantee increase out of the package (and therefore reduce your staff members’ weekly pay). This may help you manage business cashflow during the lockdown but it could lead to employee dissatisfaction and retention issues. So consider the implications carefully.
If your staff salary packages are calculated as salary + super, your business is obliged to pay the increased super contributions as an additional staffing expense.
Snapshot of Government assistance
These increases to minimum wages and the super guarantee are going to be difficult for some businesses to cover – especially during the lockdown. So it’s important to review your financial situation and the impact the increases will have on your business’ bottom line.
There is some assistance available from the Government but it’s not as comprehensive as the legal and financial assistance provided to businesses last year.
Here’s a summary:
a) Employees can apply directly for income support
Workers who are unable to earn an income due to the NSW lockdowns can apply to receive:
- $325 for the first 2 weeks if they have lost between 8-20 hours of work per week (or one full day of usual work hours). This increases to $375 for the third and subsequent weeks for this group.
- $500 for the first 2 weeks if they have lost more than 20 hours of work per week. This increases to $600 for the third and subsequent weeks for this group.
To apply for income support, employees must visit the Services Australia website. Here’s the link to some comprehensive information. Payments will begin the week after the application has been lodged.
b) Supports for business
The government has also put in place a number of grants and supports for business. These include:
- Business grants of between $7,500 – $15,000
- Payroll tax support
We recommend speaking to your Finance Department, Accountant or Bookkeeper as you will need to demonstrate “the decline in turnover experienced during the restrictions”.
For more information and eligibility criteria, visit COVID-19 help for business on the Service NSW website.
Other things to consider
- You can’t force staff to use their accrued holiday and long service leave during the lockdown. In fact you may be worse off financially as you will still need to pay them for their leave.
- You may be able to stand down your employees if your business is unable to operate at all due to the COVID-19 lockdown. However, care needs to be taken. Under the Fair Work Act, an employer cannot stand down employees because of a decline in business.
To explore your options, get in touch with us. We’ll chat to you about your circumstances and provide specific advice on your options.
Ways we can help
We can’t help you with your balance sheets and P&L statements. However, we are experts in helping businesses understand their staffing options and HR compliance obligations.
If you are looking for experienced HR experts who will support your business by providing pragmatic advice, get in touch with us. Call End2end Business Solutions on 02 8977 4002.