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 year brings a rush of activity for all business and companies, including NFP’s and charities. Whilst your mind may be focused on tax and reporting this time of year, divert your attention to the increase in national minimum wage (NMW) and award 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. The percentage increase is also normally unilaterally applied to the minimum wages documented 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 per hour. This provides an extra $70.3 before tax to minimum wage workers which as increase 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 that minimum wage will now be aligned with.

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Most employees are covered by awards that outline minimum pay rates and conditions of employment in the relevant industry. The FWC has announced that minimum award wages will increase by 5.75 per cent.

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The minimum wage increases do not necessarily translate into equivalent increases for workers who are not paid in accordance with the NMW or under a modern award. It remains open for employers to deal with proposed increases for non-award employees at another time, as long as all employees are paid more than the relevant modern award classification that would otherwise apply to their employment. Note however that employees covered by registered agreements may have the increase apply. This is because of the fact that the base pay rate in a registered agreement cannot be less than the base pay rate in the relevant award. When assessing whether an increase must be applied, you will need to take into account increases to penalties and allowances that may be incorporated into an above award payment.

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All employers need to be mindful of the increases, so you can ensure your payroll is ready for the first full pay period after the start of the financial year. Rates can be estimated by applying the increases announced by the FWC. The confirmed rates will be released 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 the employer contribution percentage over a twelve-year period. On 1 July 2023, the compulsory employer superannuation contribution rate will increase to 11%.Consequently, employers are required to contribute additional money into their employees’ superannuation accounts, in line with the increased contribution percentage rate.

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The Superannuation Guarantee increased 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 paid parental leave entitlement to 18 weeks will be combined with the current Dad and Partner Pay entitlement to 2 weeks. This means that partnered couples can claim up to 20 weeks paid parental leave between them, with each partner being required to take least 2 weeks (with some exceptions). This effects employees whose baby is born or placed in their care on or after 1 July 2023.Additionally, the payment is flexible which means eligible employees can claim it in multiple blocks until the child turns 2 years of age. There is no longer the 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 changes to how employers need to respond to requests for extending unpaid parental leave which applies to requests made from 6 June 2023. Employers must provide a written response to any requests within 21 days which must include details of the reasons for refusal, which must be based on reasonable business grounds among other requirements.

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Changes to flexible working arrangements, pay secrecy, agreement making and bargaining

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

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