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Amid the rush of the end of the financial year, there are
multiple changes that employers need to be aware of commencing on 1
July 2022. Following their annual review, the Fair Work Commission (the
“FWC”) has made a number of changes,
including changes to the national minimum wage, modern award rate
and high income threshold.
There are also changes to the superannuation guarantee rate and
superannuation guarantee threshold which will come into effect on 1
National minimum wage and modern award rate
The FWC’s wage panel is required to review annually the
national minimum wage and modern award rates. As of 1 July 2022,
the national minimum wage will increase by 5.2% to $812.60 per week
($21.38 per hour). This higher national minimum wage will apply
from the first full pay period on or after 1 July 2022.
The minimum modern award rates will also increase by 4.6%,
subject to a minimum increase of $40 per week based on a 38-hour
week for a full-time employee. With the exception of some modern
awards in the aviation, hospitality and tourism industries, the
increased rate will be effective from 1 July 2022.
Superannuation guarantee rate and threshold
The superannuation contribution rate is also set to increase
from 1 July 2022. The rate is progressively increasing annually by
0.5% until July 2025 when the rate will reach 12%. Employees who
are eligible to receive the superannuation guarantee, can expect an
increase from 10% to 10.5%. This higher rate must be used to
calculate superannuation payments from 1 July 2022.
The impact of this will depend on the structure of an individual
employee’s remuneration package and employment contract. For
employees who are paid a base amount plus superannuation it will
result in an increase in their overall pay. Alternatively,
employees who are paid an amount inclusive of superannuation will
see a decrease in their take home pay.
The $450 monthly eligibility threshold is also being abolished,
meaning that employees can be eligible for superannuation payments
regardless of how much they earn. This means that any employee
above the age of 18 who works more than 30 hours per week is
entitled to superannuation contributions of 10.5%, irrespective of
how much they earn. This change was included in the 2021 federal
budget in an effort to improve the equality of the superannuation
High income threshold
From 1 July 2022 the high income threshold will increase from
$158,500 to $162,000. This means that employees who earn more than
$162,000 will not be eligible to bring an unfair dismissal claim
unless they are covered by a modern award.
The maximum amount of compensation that can be awarded by the
FWC in an unfair dismissal claim will also increase to $81,000.
What should you do as an employer to ensure compliance?
- Review the rate of pay or salary for employees to ensure they
are being paid at least the national minimum wage or modern award
- Apply the increased superannuation guarantee rate and ensure it
is being paid to all eligible employees regardless of how much they
- Take appropriate steps to ensure employees are not underpaid.
If you have underpaid an employee, read our article about what you
should do here.
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