Legal Update on Workplace Law: annual wage review announced, super changes, parental leave changes and pay secrecy

 Increase to minimum wages

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The end of the financial yearbrings a rush of activity for all business and companies, including NFP’s andcharities. Whilst your mind may be focused on tax and reporting this time ofyear, divert your attention to the increase in national minimum wage (NMW) andaward wages set to come into force on the 1st of July.

Each year the Fair Work Commission(FWC) decides if the NMW will be increased and if so, by how much. Thepercentage increase is also normally unilaterally applied to the minimum wagesdocumented in the modern awards.

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As per the decision released on 2June the FWC has decided to increase the NMW to $882.80 per week or $23.23 perhour. This provides an extra $70.3 before tax to minimum wage workers which asincrease of 8.65 per cent. The FWC is framing this increase as being a 5.75 percent increase as that is the increase to the C13classification award rate thatminimum wage will now be aligned with.

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Most employees are covered byawards that outline minimum pay rates and conditions of employment in therelevant industry. The FWC has announced that minimum award wages will increaseby 5.75 per cent.

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The minimum wage increases do notnecessarily translate into equivalent increases for workers who are not paid inaccordance with the NMW or under a modern award. It remains open for employersto deal with proposed increases for non-award employees at another time, aslong as all employees are paid more than the relevant modern awardclassification that would otherwise apply to their employment. Note howeverthat employees covered by registered agreements may have the increase apply.This is because of the fact that the base pay rate in a registered agreementcannot be less than the base pay rate in the relevant award. When assessingwhether an increase must be applied, you will need to take into accountincreases to penalties and allowances that may be incorporated into an aboveaward payment.

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All employers need to be mindful ofthe increases, so you can ensure your payroll is ready for the first full payperiod after the start of the financial year. Rates can be estimated byapplying the increases announced by the FWC. The confirmed rates will bereleased by the FWC before 1 July 2023.

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Superannuation changes

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The Superannuation Guarantee(Administration) Act 1992 provides for a scheduled increase to theemployer contribution percentage over a twelve-year period. On 1 July 2023, thecompulsory employer superannuation contribution rate will increase to 11%.Consequently, employers are required to contribute additional money into theiremployees’ superannuation accounts, in line with the increased contributionpercentage rate.

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The Superannuation Guaranteeincreased to 10.5% on 1 July 2022 and the percentage rate will rise again to11.5% on 1 July 2024. The employer contribution rate will continue rising 0.5%each year until it reaches its final rate of 12% on 1 July 2025.

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Superannuation is currently paidquarterly however this is set to change in 2026. From 1 July 2026, employerswill be required to pay superannuation every payday to protect workers againstunpaid superannuation debts caused by employer bankruptcy.

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Paid Parental Leave Scheme changes

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From 1 July 2023, the current paidparental leave entitlement to 18 weeks will be combined with the current Dadand Partner Pay entitlement to 2 weeks. This means that partnered couples canclaim up to 20 weeks paid parental leave between them, with each partner beingrequired to take least 2 weeks (with some exceptions). This effects employeeswhose baby is born or placed in their care on or after 1 July 2023.Additionally, the payment is flexible which means eligible employees can claimit in multiple blocks until the child turns 2 years of age. There is no longerthe requirement to return to work and a family is eligible unless they makeover $350,000 per year.

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Importantly, there are also changesto how employers need to respond to requests for extending unpaid parentalleave which applies to requests made from 6 June 2023. Employers must provide awritten response to any requests within 21 days which must include details ofthe reasons for refusal, which must be based on reasonable business groundsamong other requirements.

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Changes to flexible workingarrangements, pay secrecy, agreement making and bargaining

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From the 6th of June 2023, the right toflexible working arrangements will now apply to employees or a member of theirimmediate family or household who are experiencing family and domestic violenceand employees who are pregnant. Employers also have new obligations before theycan refuse a request from an employee regarding flexible working arrangements.

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On the 7th of December 2022, paysecrecy was officially prohibited. This meant that employees have a right toshare information about their pay and employment terms and conditions if theychose to do so. Employees were also given the right to ask coworkers abouttheir pay and employment terms and conditions. Employers are no longer allowedto take action against their employees for discussing their pay. From the 7th of June 2023, any paysecrecy terms inconsistent with the new workplace rights cannot be included incontracts or written agreements entered into on or after 7 December 2022. Anypay secrecy terms in employment contracts or written agreements that wereentered into before 7 December 2022 will remain enforceable unless theagreement is changed after 7 December 2022.