Increase in Minimum Wages commencing 1 July 2020: What to watch out for in your business for payroll

Now that you have finalised your End of Financial Year for 2020, the new financial year begins.

The Fair Work Commission has just announced a 1.75% increase to minimum wages for all Award wages under the national workplace relations system, for the coming 2021 financial year.

The new minimum wage will be $753.80 per week or $19.84 per hour. It will apply from the first full pay period starting on or after 1 July 2020 for all employees not covered by an Award or agreement under the national workplace relations system.

In Western Australia, companies and incorporated trusts and partnerships are covered by the national workplace relations system. However, sole-traders and unincorporated trusts and partnerships are covered by the WA state system, which is different to the other states of Australia. The WA Industrial Relations Commission is due to hand down its decision on changes to the State’s minimum wages – which affects about 300,000 employees – by the end of the month.

Unlike previous financial years, the increase will apply in 3 stages for industry groups based on the impact of COVID – 19, summarised as follows:

1. Group 1, starting from 1 July 2020;
   1. Frontline Health Care & Social Assistance Workers;
   2. Teachers and Child Care; and
   3. Other Essential Services.* The full list of Awards covered under Group 1 is detailed below.
2. Group 2, starting from 1 November 2020; and
   1. Construction;
   2. Manufacturing; and
   3. Other industries not listed in group 3.
3. Group 3, starting from 1 February 2021.
   1. Accommodation and Food Services;
   2. Arts and Recreation Services;
   3. Aviation;
   4. Retail; and
   5. Tourism.

Currently, the Fair Work Commission hasn’t released the new Pay Guides for the 2020 financial year for those Awards in Stage 1. We’re watching for them being released and will inform our clients in due course.

AustAsia Group can help you with:

1. Cashflow planning and finance assistance;
2. Reviewing employment contracts to ensure compliance with various governing bodies;
3. Assistance setting up/migrating to cloud based accounting software; and
4. Reviewing your current payroll system to ensure compliance (Single Touch Payroll, SuperStream, payroll calculation and PAYG Withholding reporting).

* Here is the full list of awards covered by Group 1. The new Minimum Wages for these Awards apply from the first full pay period starting on or after 1 July 2020.

1. Aboriginal Community Controlled Health Services Award;
2. Aged Care Award;
3. Ambulance and Patient Transport Industry Award;
4. Banking, Finance and Insurance Award;
5. Cemetery Industry Award;
6. Children’s Services Award;
7. Cleaning Services Award;
8. Corrections and Detention (Private Sector) Award;
9. Educational Services (Schools) General Staff Award;
10. Educational Services (Teachers) Award;
11. Electrical Power Industry Award;
12. Fire Fighting Industry Award;
13. Funeral Industry Award;
14. Gas Industry Award;
15. Health Professional and Support Services Award;
16. Medical Practitioners Award;
17. Nurses Award;
18. Pharmacy Industry Award;
19. Social, Community, Home Care and Disability Services Industry Award;
20. State Government Agencies Award; and
21. Water Industry Award.

Refer to our Fact Sheet for a complete list of industries in the three Groups.

Effect of the Minimum Wage Increase on COVID 19 Relief Programs

1. JobKeeper Payment
   If an employee is being paid under the JobKeeper Payment scheme, the minimum wage increase will affect the JobKeeper Payment top-up amount per payroll cycle.
2. Payroll Tax
   The increase will affect the Payroll Tax reporting for your business depending on which state of Australia you’re operating in, as each state has its own payroll tax laws. AustAsia Group can review the effect of the new Minimum Wage on your business’ Payroll Tax reporting as well as any relief or updates to the relevant state payroll tax.For example, the NSW payroll tax threshold will increase from $900,000 to $1 million on 1 July 2020 and in WA it will increase from $950,000 to $1 million on 1 January 2021.

Please contact us at consulting@ww2.austasiagroup.com if you have any Minimum Wages related or general queries that we can assist you with. We’re here to help.