Penalty rates and the impact of change

The Fair Work Commission (FWC) has moved to cut Sunday and public holiday penalty rates.

The changes to penalty rates are not yet in force – see When will the changes take effect?

Flagged back in 2014, the review into penalty rates was part of the FWC’s four yearly review of all Modern Awards. Hearings, submissions and reviews have been ongoing since 2015. The outcome of that process (see AM2014/305 Penalty rates case) is to reduce Sunday and public holiday rates in the following Modern Awards:

• Hospitality Industry (General) Award 2010 [MA000009]
• Registered and Licensed Clubs Award 2010 [MA000058]
• Restaurant Industry Award 2010 [MA000119]
• Fast Food Industry Award 2010 [MA000003]
• General Retail Industry Award 2010 [MA000004]
• Hair and Beauty Industry Award 2010 [MA000005]
• Pharmacy Industry Award 2010 [MA000012]

When will the changes take effect?
The public holiday penalty rate reduction will come into effect from 1 July 2017 with the exception of the Clubs Award, which remains unchanged.

For the reduction in Sunday penalty rates, transitional measures will be put in place from 1 July 2017. The FWC has flagged that the reduction may be via a series of annual instalments so the full impact of the reduction will be graduated. The decision on how penalty rates will be reduced and over what time period won’t be known until May 2017.

Not everything is as simple as it seems with some penalty rate changes only impacting on employees at certain levels. For example, in the Fast Food Industry Award, Sunday penalty rates for Level 1 employees will decrease from 150% to 125% for full and part-time employees, and from 175% to 150% for casual employees. Level 2 and Level 3 employees are unaffected.

There are also some minor variations to the early/late night work loadings in the Restaurant and Fast Food Awards that will take effect in late March 2017. These variations don’t change the loading but do change the spread of hours; changing it from midnight to 7am to midnight to 6am.

It will be important for all employers affected by the Award changes to not only understand what Award their employees are covered by, but also at what level. While nothing needs to be done now, keep an eye out for the finalised Awards and other changes from May.

The SuperStream Deadline is Fast Approaching!

Small businesses with employees must be SuperStream compliant by 30th June 2016. With just 3 months before this deadline, the ATO have announced that to date, more than 60% of small businesses are already SuperStream compliant.

This means that if you aren’t already compliant, it’s important that you take steps now to become SuperStream compliant by the deadline.

SuperStream is the standardisation of how employers make superannuation payments on behalf of their employees. Under SuperStream, superannuation payments for your employees must be made electronically, in a standard format.

There are a variety of ways you can make compliant payments:

  • If you are using payroll software, your software provider will provide details on how to make SuperStream compliant payments using their software, so make sure your software is up to date.
  • Your default superannuation fund provider can act as a clearing house for your superannuation payments. Typically that will allow you to make one payment to your superannuation fund provider and they will distribute the money to other funds on behalf of your employees.
  • Use the ATO Clearing House. The ATO provides a free clearing house service for small business (under 19 employees or under $2 million turnover).  You can provide the ATO with the details of the employee payments you need to make via their online portal, do a bank transfer for the total amount, and the ATO will distribute the funds to the appropriate superannuation funds on your behalf.

There is some basic information you will need from your employees to set them up in any of these systems. You will need their Tax File Number, details of their superannuation fund and their member number, as well as the funds Unique Super Identifier number (USI) or fund ABN.

An employer checklist is available on the ATO website that provides more information on becoming SuperStream compliant.

If you have any questions about Superstream, or how to become compliant, please contact our office for further advice.