Minimum pay increases & how they affect your business

Looking to take the guess work out

On 1 July 2018 all employees under both the Federal & State pay systems will receive an increase to their minimum rates of pay. Last week the WA Industrial Relations Commission increased wages by $18 dollars a week, whilst the Fair Work Commission increased wages for Federal system employees by $24.30 per week.

So how will this affect you? Well it depends on whether you are a State or Federal system employer & the types of people you employ and how you pay them.

If you are a Sole Trader eg: Jane Smith T/as Janes Cafe, an unincorporated partnership eg: Jane & Bob Smith T/as Janes Cafe or an unincorporated trust eg: Jane and Bob Smith as trustee for Janes Cafe you fall under the WA Industrial Relations Commission. The majority of employees in Australia fall under the Federal system which covers all constitutional corporations or in layman’s terms it is any business with “Ltd” or “Pty Ltd” after its name. All other states in Australia have referred their industrial relations powers to the Federal system but Western Australia being Western Australia has chosen to keep the State based system.

The increase will affect any employee being paid as per award rates ie: junior employees, apprentices, administration employees, retail and hospitality. Even if you pay above award rates it’s still best practice to cross check your hourly rates with the award as minimum pay rates have increased by 6.8% since 1 July 2017.

Lets look at the impact for a Receptionist or Administration employee employed under the State based system. ** Please note the Department of Commerce WA has yet to release the 2018 pay rates so I have added $18 per week to the 2017 rates.

The relevant Award covers 6 Grades which increases the pay rate based upon the complexity of the role and the expectation of the employee to work autonomously within their position and years of experience.

The minimum pay rate for a basic Administration Officer / Receptionist will increase to $20.05 per hour within the first year of employment, this position is described as having basic duties & computer skills such as basic data entry, answering phones and opening mail. This employee works under supervision within established routines and procedures.

A Grade 2 Administration employee’s pay would increase to $21.05 per hour within the first year of employment, this position is responsible & accountable for their own work and works under general supervision. They typically would be responsible for operating a switchboard, manipulating databases & spreadsheets, assist in the maintenance of financial records & journal and applies existing workplace knowledge to their work.

Most administration employees would fall under Grade 3, these employees typically process payroll, are responsible for a number of different duties where they apply a working knowledge of the organisations functions, locations and clients, they are responsible and accountable for their own work, which is performed within established guidelines and they exercise limited discretion within the range of their skill and knowledge. Supervision is limited. The pay rate for this grade will increase to $21.54 per hour within the first year of employment.

All rates quoted are for a 38 hour week, any hours worked in excess of that would incur penalty rates, plus a location allowance for regionally based employees.

As you can see from the above determining the relevant award grade is not a straight forward process, though it can be made easier by ensuring you have well constructed job descriptions in place detailing the position responsibilities and expected skills and knowledge to effectively perform the role. Incorrectly determining award coverage, or assuming that there is no award which covers an employee can result in underpayment claims against an employer. The maximum penalties for underpaying staff are $54,000 for a corporation and $10,800 for an individual. In 2014-15, the Fair Work Ombudsman recovered $22.3 million in back pay for over 11,000 workers. To avoided exposing yourself to unnecessary risk we recommend that employers seek advice about award coverage, prior to employees commencing employment to ensure that they get it right from the outset.

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