As we head into the new financial year (and the end of financial year rush is finally over), it’s a good time for business owners to reflect on what has been achieved in the past year, what has worked, and what needs to change to ensure a successful year ahead.
While many businesses are setting new sales targets and budgets, it’s also important at this time to do a thorough review of the rates you’re paying employees.
Why check pay rates now?
It is a good move to periodically review salaries and ensure your pay rates are in line with industry standards, to remain competitive and help the business retain your most valued employees. While pay is only one of the factors contributing to employee retention, it’s quite a significant one!
As you look ahead and budget for the coming year, with a focus on evaluating financial risks and opportunities for growth, pay rates should certainly be considered as part of the overall risk evaluation. Inadvertently underpaying employees may lead to costly, unexpected back payments, and in some cases, fines. Of course, the damage this situation can cause to the reputation of the business can’t be underestimated.
Already paying above award rates?
Many business owners believe, in good faith, that they are paying above award rates and so may overlook this when reviewing other areas of the business. In most cases, if you’ve set or reviewed rates recently and accounted for anticipated increases, you’re likely in a good position and are not going to be too concerned. However, if a few years have passed since last reviewing pay rates, then not only has the minimum rate increased, but also the same employee may now be classified at a higher level in the award.
Annual Wage Review
As of this week, the Fair Work Commission’s Annual Wage Review decision takes effect. This means a 3% increase applies to award wages and the national minimum wage from the first full pay period on or after 1 July 2019. The national minimum wage has increased to $19.49 per hour (up from $18.93), or $740.80 per week (up from $719.20).
The 3% increase will of course only affect those employees paid at the minimum wage, or the minimum rate within the applicable modern award. If you are paying employees well above the award, you may not need to increase pay rates.
Other changes that may affect your business
As we highlighted in our recent article about businesses at risk of audit by the FWO, if you’re a fast food outlet, restaurant or café owner, then your business is more likely to come under scrutiny.
If you’re in one of these industries, then you need to be aware that, along with minimum wage increases, from 1 July 2019, some penalty rates in the following awards will also change:
- Fast Food Industry Award 2010
- General Retail Industry Award 2010
- Hospitality Industry (General) Award 2010
- Pharmacy Industry Award 2010
Depending on the specific situation, these changes could affect both permanent and casual employees that may work Sundays, public holidays, late nights or early morning shifts.
Need help checking pay rates?
We know keeping up to date with all the changes to pay rates and entitlements can be challenging at the best of times, so if you need help to review pay rates for your business, get in touch with our specialist team for a no obligation chat today.