June 21, 2018
8 HR changes you need to know for FY19
The new financial year is approaching fast and with it will come a raft of new human resources-related changes. From updates to payroll and superannuation through to increases in the minimum wage, we explore both what you need to know and what your business should be doing to prepare.
1. A minimum wage increase
The Fair Work Commission has announced a 3.5% minimum wage increase from the first full pay period starting on or after 1 July 2018. While this may sound insignificant, it is almost double the rate of inflation. This makes the new national minimum wage $719.20 a week or $18.93 an hour.
What you need to do: Check the Fair Work Commission website to work out the minimum rates you’re allowed to pay and then compare these with your staff. Even if your employees aren’t bound by an Award or instrument, you still need to make sure they at least receive the national minimum wage.
Red flag: Do you have any interns or commission-based employees how receive less than the minimum wage? If so, call the Catalina team to discuss your options.
2. The maximum Superannuation Guarantee (SG) Contribution to rise
The maximum SG Contribution base will increase to $54,030 per quarter, up from its current level of $52,760 per quarter.
What you need to do: Check for employees paid an annual base salary of $216,120 or more. The maximum SG Contribution you can now make on their behalf is $20,531.40 a year.
3. Concessional superannuation contributions caps to remain
Despite this, individuals can still make concessional (before-tax) super contributions of up to $25,000 each financial year, inclusive of the SGC you make on their behalf.
Important note: Remember, if someone doesn’t use their annual concessional contributions cap of $25,000, then they can carry forward the unused portion for up to five years, provided their total super balance is less than $500,000.
4. A 12-month Superannuation Guarantee amnesty?
Accidentally underpaid super in the past? You may have the opportunity to avoid significant penalties and have the slate wiped clean, so long as you catch up those payments soon. The government has proposed an SGC amnesty from 24 May 2018 to 23 May 2019. This will be a chance for employers to make outstanding SG payments from 1 July 1992 to 31 March 2018, without attracting the usual penalties.
What you need to do: Watch this space for more details to be provided once the legislation has been passed. If it does, you won’t be liable for administration costs or penalties for late payment if you:
- advise the ATO of any compliance issues you’ve had, and
- pay all outstanding employee entitlements.
Any SG charges still outstanding after 23 May 2019 will be subject to the normal charge rules.
5. An increase to the unfair dismissal threshold
The high-income threshold for unfair dismissal will likely increase from 1 July 2018. We expect to find out how much any day now. In FY2018, the threshold went up more than 3% to $142,000 (excluding superannuation). Given this year’s minimum wage increase, we think there will be a similar rise again in FY2019.
What you need to do: Update our documentation to reflect the fact that an employee earning over the high-income threshold can’t make an unfair dismissal application to the Fair Work Commission, unless they‘re covered by an Award or EA.
6. The 457 visa is replaced by the TSS visa
From 1 March 2018 the new TSS visa officially came into effect replacing the old 457 visa. This will bring several new changes, each of which you need to know about if you’re sponsoring an employee.
A. Skilling Australian Funds (SAF)
The coming months will see a new Skilling Australian Fund come into existence and businesses looking to sponsor staff will need to pay a training contribution charge whenever they nominate a worker, as well as each year they’re sponsored.
Businesses with a turnover of less than $10 million per year will be required to make:
- an upfront annual payment for each employee on a TSS visa of $1,200
Businesses with a turnover of $10 million or more per year will be required to make:
- an upfront annual payment for each employee on a TSS visa of $1,800
The SAF will supersede the current training benchmark requirement.
B. Labour Market Testing
The government has also updated the Labour Market Testing provisions so that employers will soon have to complete a new test for all sponsored roles. Before applying to sponsor someone for a position, the role must now have been advertised within the past four months for at least four weeks, unless international trade obligations apply.
What you need to do: Until the regulations are released and in force, the current training benchmark and Labour Market Testing regulations remain in place.
If you’re thinking about sponsoring someone and you’re not sure where these changes leave you, make sure you get advice.
7. Tax-free thresholds for redundancy to rise
When you make a role redundant, any redundancy payment you make to affected staff has a tax-free component, which rises based on years of completed service. This is indexed to change every year.
For the coming year the amounts are:
Income year: 2018-19
Base Limit: $10,399
For each complete year of service: $5,200
Single Touch Payroll (STP) From 1 July 2018, all ‘substantial employers’ – defined as businesses with 20 staff or more – will need to report to the ATO as each payroll is processed, not at the end of the financial year as is currently the case.
From 1 July 2019, those employing less than 20 staff will also be required to complete STP.
What you need to do:
- Talk to your payroll software provider. Make sure they’re ready and can manage reportable fringe benefits and reportable super contributions.
- Start acting now to make sure your processes comply. Options for exemption are limited but if you are eligible for an exemption, apply immediately. After the start of the financial year none will be granted.
- Check the ATO’s website to make sure you’re prepared – they have a handy checklist to help you get ready.
Want to know more?
As the new financial year begins, there’s so much you need to consider. Get in touch if you’d like to know more about how these changes affect your business.