Following the Annual Wage Review 2021 the Fair Work Commission has announced a 2.5% increase for minimum wages.
Are you wondering exactly what this means for your business and the effect it will have on employee wages and Superannuation?
Let’s break it down.
Who does this increase apply to?
The increase applies to anyone who is paid minimum award wages or the national minimum wage. For anyone not covered by an award or an agreement, the new national minimum wage will be $772.60 per week or $20.33 per hour.
If your staff are currently covered by a registered agreement, you will need to check it to see whether this increase affects you.
This increase will apply across all award wages, with the increase to be implemented at three different times depending on your industry.
When does this increase take affect?
The increase will take affect in the first full pay period on or after the 1st of July 2021, for most employees covered by awards with some exceptions. For example if you have a weekly pay period that starts on Mondays, the new rates will apply from Monday 5 July 2021.
However, this increase will not come into affect for businesses covered under the General Retail Industry Award until 1st of September and also doesn’t affect employees who already get paid more than their new minimum wage.
But what if my business was heavily affected by Covid-19?
Businesses in certain sectors that have been deemed heavily impacted by Covid-19 such as
These sectors will not have to implement the increase until 1st of November 2021.
For a full list of these awards can be found here
What about Superannuation?
The minimum percentage of Super that employers are required to contribute is also set to have it’s next increase, increasing to 10% from the current rate of 9.5% on the 1st of July 2021.
If an employee’s salary is currently inclusive of Superannuation, then you will need to sit down and work out their Super contribution and base award rate ensuring that it does not go below the new award rate.
When the compulsory Super contribution is increased, you will need to make sure that payroll systems are adjusted to pay the increased amount of Super. If the correct amount is not paid by the quarterly due date, other charges may be incurred.
Managing cash flow
With the Super and wage increase coming out of the budget, it is important that businesses plan ahead and budget to ensure they are able to afford this increase. Whilst also planning for subsequent Super increases as it is going up half a percent each year until it reaches 12% in 2025.
These increased costs to businesses must be taken into account for cash flow and budgeting purposes.
And finally if you need any help with understanding the new award and Super increases, don’t forget it is our speciality and we are happy to be of assistance.