Three mistakes to avoid this financial year – Payroll and workplace compliance
As the financial year draws to an end, business owners will be busy finalising their tax requirements, be it employee pays, financial statements, BAS. In the midst of all this, business owners need to be aware of the changes to minimum wage rates; something that often gets left off the to-do list.
On 30 May 2019, the minimum wage panel at the Fair Work Commission announced that there would be a 3% increase to the federal minimum wage rate that would come into effect in the first full pay period from 1 July 2019. This will lift the minimum wage rate from $18.93 per hour (equivalent of $719.20 per week) to $19.49 per hour (equivalent of $740.80 per week).
The increases to modern awards will be announced in the coming weeks and will impact your business.
Updating pay rates is something that continues to trip up businesses with 5 to 5,000 employees.
There are three common pitfalls when it comes to the annual award changes:
1. Assuming that the rate change you found on 1 May is the correct rate on 1 July
- The national minimum wage and modern award pay schedules are reviewed and revised each financial year.
- But, just because the award has been updated, does not mean it cannot be revised in the lead up to 1 July.
- There are often multiple revisions to the pay schedule in the lead up to 1 July. There are many business owners that are, unintentionally, using pay schedules that are outdated as they were unaware that the award had been subsequently updated.
Quick fix: schedule a final check on 30 June or 1 July to ensure that your system has been updated with the most recent pay schedule
2. Thinking that because you only have salaried employees, you’re safe!
- All employers need to ensure that their employees – including salaried – are being paid at least the minimum rates as set out by the applicable modern award or the national minimum wage (if they are not covered by an award).
- We have seen multiple instances where an employer has set an employee’s salary, and as years pass the salary has not increased. In many cases, they are no longer being paid the award minimum resulting in underpayment.
Quick fix: be conscious of employees that are paid a fixed salary that has not been revised for some time – check to make sure that you are still paying the award minimum rates.
3. Not classifying your employees correctly
- Often business owners are not aware of the intricacies of employee classifications and the impact on their pay rate. Should an employee’s primary duties change, this may indicate that their classification should also change.
Quick fix: as you will be referring to the award to find the new rates, why not take this opportunity to review the classifications and ensure that all your employees are being correctly classified and consequently correctly paid.
Now is the perfect time for businesses to start preparing for the updated pay rates for modern awards and implement a system to ensure that any increases are reflected in the first full pay period commencing on or after 1 July 2019.
By being aware of common mistakes, you can prevent problems occurring. Whilst this is by no means a simple exercise, we are here to support you if you need assistance with this or general payroll and workplace compliance.