Compliance Update – August 2019

The latest people and payroll compliance updates

Recently both Fair Work and the ATO have recently announced changes which may require you to update your payroll system and processes. We’ve summarised these below, with links to further info.

Fair Work Commission Annual Wage Decision

Fair Work has announced their annual wage review decision effective the first full pay period on or after 1/7/2019. They have determined that it is appropriate to increase the National Minimum Wage by 3.0 per cent. The new National Minimum Wage will be $740.80 per week, or $19.49 per hour. This amounts to an increase of $21.60 per week to the weekly rate. They have also decided to increase all modern award minimum wages by 3.0 per cent. Weekly wages will be rounded to the nearest 10 cents.

The casual loading in modern awards will remain at 25 per cent (the casual loading in the Business Equipment Award 2010 will be increased to 24 per cent, consistent with the phasing approach). The casual loading will also apply to Award/Agreement free employees. The apprentice wage provisions and the National Training Wage Schedule in the Miscellaneous Award 2010 for award/ agreement free employees to whom training arrangements apply. The 3.0% increase also applies to modern award minimum wages for junior employees, employees with a disability, piece rates, and employees to whom training arrangements apply (as per the National Training Wage Schedule and the provisions in the Miscellaneous Award).

What do I need to do?

The Commission will issue draft determinations and orders about how this decision affects modern awards. It will then update the pay rates in each award.

It usually takes the Commission a few weeks to do this. Once they make these changes, Fair Work will update their pay tools with the new rates.

More information: https://www.fairwork.gov.au/about-us/news- and-media-releases/website-news/get-set-for-a-3-0-wage- increase-2019-annual-wage-review

Fair Work Pay Slip Requirements

Fair Work have made a recent update to the ‘What has to be on a pay slip?’ guidance on their website. The site now includes the term ‘casual loading’. If this is not shown on the pay slip, a note can be included to state that the hourly rate incorporates the casual loading.

What do I need to do?

For Aurion users, your system can add your preferred casual loading message on the standard ER012 and ER230 Pay Advices. For other systems, we recommend you review your current pay slip format to ensure you can meet the above Fair Work requirements.

A friendly reminder: It is important to ensure that pay slips are provided on time to employees within the legal time frames. Employers should provide a pay slip, either electronically or in a printed format within one working day of pay day, even if an employee is on leave.

More Information: https://www.fairwork.gov.au/pay/pay-slips- and-record-keeping/pay-slips

ATO Advice: Ordinary Time Earnings – Annual Leave Loading

Recently the ATO released their position on “super on leave loading”. Historically there has been confusion on this issue as since 2009 the ATO website has said that leave loading is not subject to super. However, this isn’t entirely correct, as the law actually states it is not subject to super IF you can prove that leave loading is being paid to compensate for a loss of overtime.

The good news is, that due to the confusion around this issue, the ATO will not be proactively reviewing prior treatment of super on leave loading, and instead will be focusing on evidentiary requirements for future quarters (going forward).

What do I need to do?

Given the ATO focus is now on ensuring this has been correctly configured going forward, we recommend you review your situation immediately and start applying the correct rules.

More Information: https://www.ato.gov.au/Business/Super-for- employers/In-detail/Ordinary-time-earnings/Ordinary-time- earnings—annual-leave-loading/

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