Increase to national minimum wage

Stephen Follows — Wed, 15 Jun 2022 02:01:55 +0000

The Fair Work Commission has increased the national minimum wage by 5.2% or roughly $1 an hour to $21.38 an hour.

The Hospitality and Tourism sector, along with other hard hit industries like Aviation, has been given a temporary reprieve with the wage increase to apply from 1 October 2022.

The wage increase however has been split, meaning millions of workers on a higher Award rate will only see an increase of 4.6 per cent.

This increase comes on top of an increase to the Superannuation Guarantee (SG) rate as well as abolishing the minimum monthly wage threshold for SG contributions to apply.

Employers need to be ready

Employers should review employee remuneration and ensure wages do not fall below the minimum wage and consider the total hours worked and overtime hours to mitigate any risks to modern slavery laws. It is important that employers update their payroll software accordingly.

Employers who are subject to Awards that provide for annual leave loading of 17.5% to employees will also need to adjust the minimum wage rate where the loading is based on the minimum wage rather than the employee’s base salary.

For the latest superannuation impacts that all businesses need to know before 1 July 2022, download our webinar Superannuation changes 2022/23 or view our recent article Don’t get caught out by upcoming superannuation changes.

How SW can assist

SW through our joint venture with OnTap Hospitality can assist you with all of your bookkeeping, payroll and management reporting needs.

Do not hesitate to contact our Hospitality and Tourism sector specialists Tim Stillwell, Andy Lau and Jeremy Wicht or our payroll expert Sharon Burke.

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SG minimum to increase 10% from 1 July 2021 – are you ready?

admin — Fri, 04 Jun 2021 02:00:00 +0000

The Superannuation Guarantee (SG) rate will increase to 10% from 1 July 2021 under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) and will rise by 0.5% per year until it reaches 12% by FY 2025.

Employers need to start planning now for the change in the superannuation contributions.

Total remuneration package

Where employees are structured on a total remuneration model, employers will need to communicate to staff before 1 July 2021 that their cash salary will decrease to give them time to plan for the change.

For example, if an employee is currently on a total remuneration package of $150,000 (excluding any allowances and non-cash benefits), the current split is:

Cash gross wages – $136,987
Super – $13,013

Where the remuneration package is unaltered from 1 July 2021, the split will be amended as follows:

Cash gross wages – $136,364
Super – $13,633

Based on the example, the employee will have a reduction in cash gross salary of $623 per annum or $52 per month.

To avoid negative impact to employees, it may be an opportune time to complete salary reviews before 30 June 2021 to ensure the pay increments at least cover the hit to the employee’s cash salary component, provided the business can support the cost and cashflow.

Gross salary plus super

Employees who are packaged on a gross salary plus super arrangement will have no impact on their cash salary, although employers need to factor in the additional wages cost for the superannuation increment of 0.5%. This will mean the total wages costs will increase for other on-costs such as payroll tax, WorkCover.

Maximum Contribution Base (MCB)

The minimum SG superannuation contribution of 10% from 1 July 2021 is also capped to the MCB. The MCB will increase to $58,920 per quarter (FY 2021 $57,090 per quarter). This means the maximum superannuation contribution for an employee earnings more than $235,680 will be $23,568, ($58,920 x 4 = $235,680 x 10%). An employee’s contribution will be limited to the MCB of $23,568 unless the employer chooses to override the MCB cap.

The concessional superannuation cap will also increase from $25,000 to $27,500 for contributions received in FY 2022. This is the first increase in the concessional cap since FY 2017. The concessional superannuation cap covers both employer contributions (including salary sacrificed contributions) and personal contributions claimed as a tax deduction by the member.