June 24, 2019
FY20: Is your business HR ready?
FY20 is almost here and it’s bringing a range of human resources related changes. From updates to payroll and superannuation through to increases in the minimum wage, we explore what you need to know and what your business should be doing to prepare to be HR ready for the next financial year.
1. A minimum wage increase
A 3% minimum wage increase will apply from the first full pay period after 1 July 2019. This may sound insignificant but it is almost double the rate of inflation. The new national minimum wage $740.80 a week or $19.49 an hour.
What you need to do:
You need to make sure you pay all employees at least as much as the national minimum wage, even if they’re not covered by an Award or industrial instrument. Check out the Fair Work Commission website to work out how your wages compare to the minimum. If you’re having trouble navigating these tables, get in touch.
Do you have any interns or commission-based employees receiving less than the minimum wage? If so, call us to discuss your options.
2. The maximum Superannuation Guarantee (SG) contribution to rise
The maximum SG contribution base will increase to $55,270 a quarter, up from $54,030 a quarter. This is a salary of $221,080 a year.
What you need to do:
If you have any employees who receive an annual base salary of more than $221,080, you’re limited to making a maximum SG Contribution on their behalf of $21,002.60 a year.
If you offer ‘base plus super’ watch that you don’t inadvertently pay your employees over the maximum threshold unintentionally.
3. Concessional superannuation contribution caps to remain
Any of your employees can make a concessional (before-tax) super contribution of up to $25,000 each financial year. Typically, people do this by electing to salary sacrifice a regular or lump sum amount into their nominated superfund. Any SG contribution you make on their behalf will count towards this threshold.
The detail to remember:
If someone doesn’t use their annual concessional contributions cap of $25,000, they can carry forward the unused portion for up to five years, provided their total super balance is less than $500,000.
4. Another increase to the unfair dismissal threshold
The high-income threshold for unfair dismissal is likely to increase from 1 July 2019, although we’re not yet sure by how much. In FY2019, the threshold went up more than 3% to $145,200 (excluding super). Given this year’s minimum wage increase, we forecast a similar rise for FY2020. The high-income threshold is also used to estimate the maximum amount someone can potentially receive under a successful unfair dismissal claim.
What you need to do:
Update your documentation to note that an employee earning over the high-income threshold, can’t usually bring an unfair dismissal application to the Fair Work Commission. There are some exceptions, such as if they‘re covered by an Award or EA that entitles them to access the FWC’s unfair dismissal jurisdiction.
5. Tax-free threshold for redundancy to rise
Any redundancy payment you make to an employee has a tax-free component. The amount of this component rises in line with how many years of service an employee has provided.
For FY20, the tax-free thresholds will be:
Base Limit: $10,638
For each complete year of service: $5,320
6. Single Touch Payroll (STP)
From 1 July 2018, businesses with 20 or more staff have needed to comply with Single Touch Payroll. From 1 July 2019, this will extend to businesses employing fewer than 20 staff.
What does this mean?
All employers now need to report to the ATO as each payroll is processed, not at the end of the financial year.
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 also.
– Start acting now to make sure your processes comply. There are some limited exemptions but if you qualify you’ll need to apply immediately. No exemptions will be granted after the start of the financial year.
– Check the ATO’s website to make sure you’re prepared – they have a handy checklist to help you get ready.
7. Whistleblower legislation effective from 1 July 2019
The federal government has passed reforms providing greater protections to a wider range of whistleblowers. These will make it mandatory for organisations to have a whistleblower policy.
Most of the reforms included in the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018, will commence on 1 July 2019 and aim to encourage disclosure of crime and misconduct in the private sector.
What do you need to do?
Public companies must have a whistleblower policy in place by 1 January 2020. Private companies must have a whistleblower policy in place by 1 January 2021, if they employ more than 50 employees, and have $25m consolidated revenue per financial year, or $12.5m in assets. To comply with the new regime, your policy must explain:
– the protections available to whistleblowers
– who they can make disclosures to
– how they can make disclosures
– how your organisation will support them
– how it will investigate disclosures
– how it will ensure fair treatment of employees mentioned in disclosures, and
– how the policy will be made available to employees.
There’s still time to get these policies in place but if you’d like some help please contact us.
8. Changes post-Federal election
Just prior to the May 2019 federal election, a series of employment-related proposals and bills stalled in the parliament. These covered areas such as converting casuals to full-time staff, sham contracting, superannuation and union regulation.
We expect some of these issues will be re-ignited by the returning Coalition government in the next parliament. So stay tuned.
Are you FY20 ready?
As FY20 begins, there’s plenty of HR related changes that businesses need to be on top of. If you still have any questions regarding the changes or are keen to find out how they may affect you or your business, then speak with one of the Catalina Consultant team members today.