National minimum wage increases from July 1, 2022. What you need to know.

Workers on the minimum wage will see their pay rise on July 1, 2022, to $21.38 per hour, or $812.44 per 38-hour week (or a flat rate of $40 per week for employees earning below $869.60 per week).

This is a 5.2% increase of the national minimum wage and 4.6% for award minimums and is in addition to the 0.5% Superannuation Guarantee increase on July 1, 2022.

This is above the current inflation rate of 5.1% following an election promise from Prime Minister Anthony Albanese to raise the minimum wage in line with inflation.

The commission ruled the increase will be delayed to October 1, 2022, in the aviation, tourism and hospitality sectors because of their slower recovery from the Covid recession.

For employees, this may feel a modest step up from the previous rate of $20.33 per hour, but there are many implications for small businesses paying their staff who need to consider, including:

National Minimum Wage increase

• From July 1, 2022, the National Minimum Wage will increase by 5.2%, which amounts to $40 a week.
   
• The new National Minimum Wage will be $812.60 per week or $21.38 per hour

Award minimum wage increase

Modern awards cover things such as minimum wage rates, annual leave hours of work, penalty rates, allowances and other minimum conditions and usually relate to a specific industry or occupation.

• Minimum award wages will increase by 4.6%, which is subject to a minimum increase for award classifications of $40 per week and based on a 38-hour week for a full-time employee.
   
• Above $869.60 per week, will get a 4.6% increase
   
• Below $869.60 per week, will get a $40 increase.

A list of awards can be found here.

Penalty rates

Penalty rates are the legal requirement for employers to pay their employees at a higher pay rate during the weekend, public holidays, overtime, late night or early morning shifts. You can check what penalty rates apply for employees here.

Minimum wage for juniors

A junior employee is any employee under the age of 21. The minimum wage due depends on their age and is determined as a percentage of the national wage, depending on the industry they are working in. More information can be found here.

Minimum wage for apprentices

The rate of pay varies across industries, depending on the nature of the work and risk involved and the age of the apprentice.

Apprenticeships are tiered and apprentices move up the next level by either working for a certain amount of time or demonstrating their competency. As they move up, their rate of pay increases.

The most important thing is that employers ensure they are operating in accordance with the conditions stipulated in the relevant award.

Use the Fair Work Ombudsman Pay Calculator to determine the exact rate for a specific apprenticeship.

Superannuation

Employers are required to pay a minimum 10% superannuation contribution to their employees based on their ordinary time earnings when an employee earns $450 or more pre-tax in a month and is over 18 years old or is under 18 and works more than 30 hours a week. This is scheduled to increase to 10.5% and the $450 monthly income threshold for super contributions will be removed from July 1st, 2022

This is applicable to full and part-time employees and, depending on the agreement, some casual employees.

How we can help

We can advise you regarding all aspects of payroll preparation and compliance, making sure your calculations are correct and that you meet your deadlines and requirements. We can also offer advice on recruitment and staff retention and provide human resource consultancy services through one of our approved suppliers.

We can file your in-year and year-end returns for you with ATO and provide you with PAYG withholding tax declarations to distribute to your employees at the year-end.

TaxAssist Accountants can also assist with:

• Setup and Administration of Self-Managed Super Funds (SMSF)
• Assistance with Lump Sum withdrawals
• Assistance on Property, Shares & Investments inside Superannuation Funds
• Audits on Super Funds

The responsibilities faced by employers can be intimidating, but we can guide you through the processes, costs, calculations and deadlines and take care of everything for you.

Date published 17 Jun 2022 | Last updated 9 Jul 2022