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JobKeeper and termination payments & the minimum wage increase

Jul 16, 2020 | Accounting, Business | 0 comments

A number of changes to employee awards and legislation have come into effect and small businesses must comply with them or face consequences by the Fair Work Ombudsman and the Australian Taxation Office. Legislation and individual awards around employee entitlements change regularly. Organisations are required to comply with Federal, State-based, and award-based legislation together, making it one of most complex and legislated areas of business administration. For updates regarding JobKeeper and termination payments & the minimum wage increase, keep reading!

JobKeeper and Termination Payments

An employment termination payment (ETP) is a lump sum payment made to an employee when their job is terminated. ETPs are generally made up of unused sick leave or unused rostered days off, payment in lieu of leave, or genuine redundancy payments, etc.

For some employers, JobKeeper will not be enough to keep the employee employed. If you do need to let staff go, the ATO has stated that from JobKeeper fortnights from 8 June onwards until the end of the scheme, ETPs cannot be included as part of the $1,500 an employer needs to pay to eligible employees to access JobKeeper payments.

If any JobKeeper payments include an ETP to a terminated employee between 30 March to 7 June, the ATO has stated that it will not recover an overpayment.

Minimum wage increases by 1.75%

An increase to the minimum wage of 1.75% will start rolling out for the first full pay period from 1 July 2020.

The increase applies to minimum rates in awards in 3 stages:

Group 1 Awards – from 1 July 2020

  • Frontline Heath Care & Social Assistance Workers
  • Teachers and Child Care
  • Other Essential Services

Group 2 Awards – from 1 November 2020

  • Construction
  • Manufacturing
  • A range of other industries

Group 3 Awards – from 1 February 2021

  • Accommodation and Food Services
  • Arts and Recreation Services
  • Aviation
  • Retail
  • Tourism

You can find the full list of impacted Awards on the Fair Work Ombudsman’s website.

For anyone not covered by an award or an agreement, the new national minimum wage of $753.80 per week or $19.84 per hour, applies from the first full pay period starting on or after 1 July 2020.

The minimum wage increase does not impact on workers receiving above the minimum wage.

For employees at or close to the minimum wage, it is essential that employers are aware of the impact and timing of the increase to avoid falling foul of their industrial and superannuation obligations.

It is vital that businesses hire a qualified payroll professional, who can keep abreast of the upcoming changes in government legislation and employee awards. They can also join an organisation, such as the Australian Payroll Association, to receive regular updates on awards and legislation, stay up-to-date with benchmark systems and processes, and review their own systems through regular online or in-person payroll training.

Alternatively, the Team at DGL Accountants are here to assist you with your payroll enquiries, reach out to us today!