Understanding the Superannuation Changes
Firstly, let's delve into the superannuation changes. The superannuation guarantee has increased from 10.5% to 11% from 1 July 2023. This means employers must contribute 11% of an employee's earnings to their superannuation fund.
Additionally, the general transfer balance cap has been indexed, rising from $1.7 million to $1.9 million. This change allows individuals to make additional non-concessional contributions to their super funds.
Moreover, the minimum pension amounts for super income streams will return to their default rates. Self-Managed Super Funds (SMSFs) must now report transfer balance events quarterly instead of annually.
The Importance of Accurate Wage Calculations
Incorrectly calculating wages is not merely an error—it is considered "wage theft." If businesses fail to pay their employees correctly, they risk damaging their reputation and facing substantial fines. The Fair Work Commission can enforce penalties of $9,390 per breach for corporations.
In the 2021-22 financial year alone, the Fair Work Ombudsman recovered a staggering $532 million in unpaid wages for over 384,000 workers. These figures highlight the importance of accurate wage calculations and compliance with Fair Work regulations.
Key Changes to Wages from 1 July 2023
From 1 July 2023, award rates of pay and the National Minimum Wage saw a significant increase of 5.75%. All employers must review their payroll systems to ensure they apply the correct rates and Awards.
The National Minimum Wage now applies to workers not covered by an Award or registered agreement. As of 1 July 2023, the National Minimum wage has risen to $23.23 per hour ($882.80 per week for a full-time employee working a standard 38-hour week).
The minimum wage, including the 25% casual loading, is now at least $29.04 per hour for casual workers. Adult minimum award wages for workers under an Award have increased by 5.75% from the first full pay period on or after 1 July 2023. Proportionate increases apply to junior workers, apprentices, and supported wages.
Impact of Superannuation Increase on Wages
The increase in the superannuation guarantee to 11% has implications for wages. If an employment agreement states that an employee is paid on a 'total remuneration' basis (base plus SG and any other allowances), the employee's take-home pay might be reduced by 0.5%. This is because a larger percentage of their total remuneration will be directed to their superannuation fund. However, if the employee is paid a rate plus superannuation, their take-home pay will remain the same, and the 0.5% increase will be added to their SG payments.
The changes that took effect from 1 July 2023 demand careful attention and understanding from employers and businesses. Ensuring compliance with these new standards is not just about avoiding penalties - it's about maintaining the trust and respect of your employees. At LEAD Advisory Group, we're here to help you navigate these changes and provide expert advice tailored to your business needs.