June 22, 2020
FY21 is coming. Are you ready for these HR changes?
FY21 is almost here and, as always, it’s bringing a range of human resources related changes. From updates to awards and superannuation through to increases in the minimum wage and paid parental leave, 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. FY21 minimum wage increase
The Fair Work Commission has announced a 1.75% increase to minimum wages. This will apply to all award wages. Increases to awards will start on three different dates for different groups of awards:
- Frontline and essential services get the increase from 1 July, 2020.
- Manufacturing and construction award wage rates will be increased from 1 November, 2020.
- Accommodation, food, retail, tourism, and aviation will be increased from 1 February, 2021.
For anyone not covered by an award or an agreement, the new national minimum wage (NMW) will be $753.80 per week or $19.84 per hour. The increase to the NMW applies from the first full pay period starting on or after 1 July 2020.
What you need to do: You need to make sure that 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. And from there, check out the Fair Work Commission website to work out if your business is affected now, in November, or not until February 2021. If you’re having trouble navigating these changes, get in touch.
Red flag: 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 contribution to rise in FY21
The maximum SG contribution base will increase to $57090 a quarter, up from $55270 a quarter. This is a salary of $228,360 a year.
What you need to do: If you have any employees who receive an annual base salary of more than $228,360, you’re limited to making a maximum SG Contribution on their behalf of $21,694.20 a year.
Red flag: 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 will increase from 1 July 2020from $148,700 to $153,600 (excluding super). This threshold effectively limits an employee’s eligibility to be protected from unfair dismissal under the terms of the Fair Work Act. But be careful as the employee may be covered by a modern award that negates this threshold’s impact. 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: $10,909
- For each complete year of service: $5,496
6. JobKeeper payments to continue to 27 September
For those businesses who are eligible for the JobKeeper wage subsidy, these reimbursements will at this stage continue through to 27 September. Whilst there has been speculation that the system may finish early or in fact continue, at this point it is still intact.
One point to watch and prepare for: August 2020 is a three-fortnight month so the per-employee subsidy will be $4500 for August unless you pay monthly and have already adjusted the fortnightly amount to match your monthly payroll.
7. Changes to the Paid Parental Leave scheme from 1 July (FY21)
Currently, employees can get Parental Leave Pay for a continuous block of up to 18 weeks. This equates to 90 payable days.
From 1 July 2020 this entitlement changes somewhat in terms of how the leave may be taken. If the child’s birth or adoption is on or after 1 July 2020, your employee may still get up to 90 days. However, their payment will include both:
- a continuous Paid Parental Leave period of up to 12 weeks, which is 60 payable days, plus
- 30 Flexible Paid Parental Leave days to be used over the course of up to 24 months.
It is anticipated that many employees may still wish to receive Parental Leave Pay in a single continuous 18 week block and to do this, the 12 week Paid Parental Leave period will simply be connected to their 30 Flexible Paid Parental Leave days.
What to do now: not a lot – the responsibility for making this choice lies in the hands of the employee, however you may need to consider how your business accommodates the 30 flexible days over 24 months in terms of workload and resourcing.
8. Changes to Awards in 2020
The Fair Work Commission (the Commission) has been reviewing all modern awards since 2014, as part of its 4-yearly review of modern awards. During this process, they’ve clarified how some award clauses work and changed other clauses. Then in September 2019, the Commission confirmed that they’re finalising their review and the new awards will start taking effect at different stages throughout 2020.
For most awards, the biggest change is to the layout, language and the inclusion of rates tables to help you find the right pay. Other aspects such as clarification of the annualised salary provisions have also been inserted to a number of awards.
The easiest way to tell if your award has changed is whether the “(2010)” at the end of the title has been changed to “(2020)” – eg Retail Award (2010) is now Retail Award (2020).
Reach out if you are wanting advice on any of the Award changes relevant to your business.
Are you FY21 ready?
The last six months have presented business owners with a lot of change and uncertainty when it comes to HR legislation. As FY21 begins, there’s plenty more HR related changes that businesses need to be on top of. If you 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.