FibreHR Blog

We share some of our recruitment strategies in our blog. FibreHR, your people are our business.

Minimum Wage increase

Lisa Spiden - Friday, June 06, 2014
The Fair Work Commission has announced a 3.0% increase in the minimum wage in its annual review. Effective from July 1 2014, the national minimum wage will be $640.90 per week for employees who are not on modern awards. This is an increase of $18.70 per week, or 50c per hour.

According to the commission, the decision was based on a number of factors, including the anticipated positive outlook for the Australian economy, social and lifestyle considerations of lower paid employees, and the increase in the cost of living. The Commission noted that while ‘real earnings’ have typically increased in the past decade, inequality in earnings was also increasing and a number of factors had culminated in there being a reduction in the relative living standards of award-reliant workers. 

In making its decision, the Commission has again said that the introduction of an increased superannuation guarantee rate was a moderating factor in considering the adjustment that should be made to minimum wages. However, it refused to take into account any improvements in living standards that could arise as a result of the government’s proposed abolition of the carbon price, saying this approach invited it to ‘speculate on the outcome of an uncertain political process’. For the same reason, it did not take into account proposed changes to the tax-transfer system announced in the latest federal budget.

New wage details for those employees who are covered by modern awards will also be available from July 1. As an employer, there are a number of steps you should take to prepare your business for the changes, and make sure you are in compliance with the new award increases:
  1. Review your budget to prepare for the increase from July 1.
  2. Make sure you receive the updated award information from Fair Work Australia so you can check that your employees are being paid the correct amounts for the relevant awards.
  3. Update your payroll systems so they are ready to go for July 1.
  4. Don’t forget there is a rise in superannuation payments effective from July. This will take the employer contribution from 9.25% to 9.50%.
The Commission also confirmed an increase in the casual loading for award/agreement free employees to 25% (which aligns with the casual loadings applicable in most modern awards).



What you need to know about changes to Superannuation

Lisa Spiden - Tuesday, April 09, 2013

As a business owner, you are probably aware that there are some changes planned to superannuation and the minimum requirements paid to employees, but do you know exactly what they are, and how they will affect your business? 

Some changes were implemented last year, and there are further changes that will take effect from July 1 this year. 

Here is a summary of what is coming up.

Increase in compulsory super contributions 

As an employer, you are required to make minimum superannuation contributions on behalf of your employees. The amount you contribute is calculated as a percentage of your employee’s salary, and is currently set to a minimum of 9%, which is paid into a nominated superannuation fund.

The main change to super arrangements is that compulsory employer contributions will rise from 9% to 12% incrementally over the next seven years. As an employer, this means that you need to start planning now.

The superannuation rate changes are noted below

Year Rate
Current rate 9%
1 July 2013 9.25%
1 July 2014 9.50%
1 July 2015 10.00%
1 July 2016 10.50%
1 July 2017 11.00%
1 July 2018 11.50%
1 July 2018 onwards 12.00%

What does this mean for your business?

Employers are going to be faced with increased superannuation costs, which they will either have to pay on top of normal salaries or mitigate via reduced remuneration and the restructuring of an employee’s overall package.

Although you might be tempted to reduce your employees’ remuneration to make up for the extra superannuation contributions, please be aware that this may not be as simple as it sounds. A change in package might breach the employment contract and your employees will need to agree to any changes or new clauses, before you can legally implement them. If they don’t agree, you may need to pay the extra amount.

Another thing to be aware of is that reducing your employees’ remuneration might lead to them dropping below their minimum award entitlements which is a breach of the Fair Work Act.

One way that you might approach these changes, and keep your costs under control, is by keeping the increase in mind when conducting annual pay reviews. Additional superannuation costs can be factored in there, rather than by reducing overall employee remuneration.

Removal of upper age limit

Where previously compulsory super contributions stopped once an employee reached the age of 70, under the new legislation, there is no upper age limit - which means that employers will need to continue paying compulsory superannuation contributions as long as the employee is working. This is a move designed to encourage older workers to stay in the workforce longer.

This change is taking effect from July 1 2013, and will affect businesses with older employees. You will need to make sure you are paying the compulsory superannuation contributions for any employees you have that are 70 or older.

Payslip changes

Currently it is mandatory that payslips show the number of superannuation payments and the amount accrued to date. A number of changes to how superannuation payments are reported on payslips and group certificates took effect on July 1 2012.

If you haven’t already, you will need to ensure that your employees’ payslips display the following information:

  • The name of the super fund they are contributing to 
  • The dates of the next contribution to be made 
  • The amount of all the contributions made, including any upcoming payments 
  • The time period during which any contributions were made

Failure to provide this information on payslips can lead to penalties for your business. Your employees’ group certificates also need to be updated with the relevant information. These changes are designed to keep employees better informed about their super contributions, and allow them to identify any errors or insufficient payments before they go through. This is particularly important with the planned employer contribution increases that are due to take place over the next seven years.

As an employer, it is important that you make sure your payroll systems are updated to reflect these changes, so you can make sure you are in compliance, and don’t end up facing fines.

MySuper

The new MySuper product is a single standardised default super product that can be offered by different superannuation funds. It is designed to modernise and streamline the superannuation process, and make it easier for employees who don’t nominate a specific super fund to their employer.

There are a number of standards that funds offering a MySuper product will have to abide by. These include a ban on hidden fees, standardised reporting policies, and removal of commissions in relation to group insurance, as well as a number of additional changes and features.

Under the new legislation, employees who don’t nominate a superannuation fund will have to have their superannuation contributions automatically paid into a MySuper product and therefore it is the employers responsibility to ensure the businesses default fund is part of MySuper. Employees will still have the same options to nominate alternative superannuation funds, including self-managed super if they wish.

Director responsibilities

As part of the new legislation, company directors are to be held more accountable for any lack of compliance on the part of their business, especially in making payments to superannuation funds. Where previously there were limitations on the responsibility of directors in certain circumstances, these have now been addressed and accountability has been increased.

As the director of a company, you are personally responsible for any non-compliance with the new superannuation legislation. This means that you can personally face fines if your business doesn’t follow the new superannuation rules. The amount you will need to pay if you have failed to make sufficient contributions will be the same as the amount of the outstanding contribution.

The fines for non-compliance with procedural and documentary legislation are $510 per contravention for an individual, and $2,550 per contravention for a body corporate. If your business or company pays the fine on your behalf, you will no longer be considered liable. Your personal liability is also removed if your company appoints an administrator or begins liquidation proceedings before being issued with a penalty notice, or within 21 days of its issue.

The planned superannuation changes are going to affect all businesses that have employees.

Make sure you are prepared and know what your business needs to do to comply with the new legislation, and that your employees are informed of how the changes will affect them, particularly in regards to remuneration and pay increases.

Planning now means that you have a greater chance of a smooth transition when the changes come into effect in July 2013, and reduces the likelihood of your business being disadvantaged financially as a result of the changes.

Data and e-commerce standard

A new data and e-commerce standard is also being introduced to make arrangements for employers to send contributions to all superannuation funds in one standard electronic format. In future, employers will no longer need to provide this information to separate funds in different formats.

To make this change possible, from 1 July this year, Australian Prudential Regulation Authority (APRA) regulated super funds and retirement savings account (RSA) providers will be transitioning to the new e-commerce standard. Once this is complete, from the 1st January 2014 (or earlier depending on the fund), employers will be able to send super contributions to APRA or RSA approved funds according to the new standard.

From 1 July 2014, all large and medium employers (with 20 or more employees) must use the standard for sending contributions to funds. From 1 July 2015, all small employers (with less than 20 employees) must use the standard for sending contributions to funds.

However, small employers may be eligible to use the free Small Business Superannuation Clearing House. Employers can register for the service by visiting the Department of Human Services website www.humanservices.gov.au/smallbusinesssuper or by phoning them on 1300 660 048.

If your an employer who is paying superannuation through an accounting package, payroll or other internal system, it prudent that you start thinking now about your options for implementing the changes, to ensure that your business is compliant with these new changes.

What is performance management?

Lisa Spiden - Wednesday, February 06, 2013

As a business owner or manager, performance management is a term which you are probably familiar with. Although the phrase is widely used in the business world, there are a lot of misconceptions about exactly what performance management is, and how to do it effectively.

Here is a brief guide to the process of performance management, and how a good performance review can benefit both your employees and your business.

Performance management involves monitoring an employee’s performance against a pre-defined set of goals or behaviours. Feedback can be provided in the form of formal reviews, and also more informal discussion on a regular basis.

Why is performance management important?

If you want your team to work effectively, everyone needs to be aware of their role and receive regular feedback on what they are doing well, and what they can improve on.

Performance management should be a proactive process that you undertake on an ongoing basis with your employees, rather than be just a reactive way of dealing with inappropriate attitudes or behaviours in the workplace.

What are the benefits of performance management for the employer?

Regularly undertaking performance management strategies can help ensure everyone knows what their role is within the team, and the organisation itself, and that the business as a whole is working as effectively as possible. Monitoring performance and providing feedback can also help you identify and deal with potential issues before they become major problems.

Although performance management is about individual employees, every staff member is part of a larger team. For your team to run effectively, every person in your business needs to be working towards the same goals. Conducting regular performance management can help achieve this.

Regularly undertaking performance management can also help employees feel more valued, which can make it easier to retain staff. Losing valuable employees can be detrimental to your business. Ensuring that every team member knows their role and receives regular advice and guidance as to how they can better meet expectations can help your staff develop in their role, and maintain their loyalty to your business.

What are the benefits of performance management for staff?

Having a clearly defined role and receiving regular feedback can help your employees grow and develop their skills. Demonstrating that you are paying attention to your staff helps them feel more valued and rewarded for their efforts, which can lead to a higher level of job satisfaction and lower levels of stress.

If undertaken well, a performance review can be an opportunity for employees to discuss their concerns, as well as receive feedback. Making sure that staff members are clear on the parameters of their role, and what their expectations are, makes it easier for them to do their job, and reduces any potential misunderstandings that might affect their performance.

Regular performance management activities have many benefits for both employees and employers. Your staff members are your best assets, and by demonstrating that you are prepared to invest time and effort into helping them achieve their full potential, you can benefit both individual team members and your business as a whole.