July award wage increase danger for practices

3 minute read

A looming 5.75% staff award increase as well as a bump to super might hit certain practices very hard.

As of 1 July, any practice staff on an award who aren’t covered by a valid and up-to-date signed individual flexibility employment contract will be due a pay rise of 5.75%, regardless of whether a practice is already paying them over the award rate or not.

The Fair Work Commission (FWC) minimum wage panel review provides an increase of 5.75% to Modern Award Minimum wages for all classification levels, with those increases effective from the first full pay period commencing on or after 1 July 2023.

Many practices will be employing staff either under the Nurses Award 2020  or the Health Professionals and Support Services Award 2020.

In addition to ensuring each staff member under an award receives the appropriate increase, every practice will need to up its superannuation payments for all staff members an additional 0.5% of their base salary, taking the rate from 10.5% to 11%.

According to principal of practice advisory firm HealthandLife, David Dahm, the key problem facing a lot of practices is a lack of awareness surrounding how they need to apply the National Minimum Wage increase which is due on 1 July.

“A lot of people don’t realise that it’s not just people on the minimum wage and people on base award rates that this increase applies too,” Mr Dahm told TMR.

“A common error is that a practice believes that because they are paying above an award rate, they are protected from an underpayment of wages claim.

“The only exception is if you have a valid and up-to-date signed individual flexibility employment contract in place with each staff member,” he said.

Mr Dahm told TMR that the 5.75% increase, combined with the lifting of the Superannuation Guarantee Levee from 10.5% to 11% on the same day will likely put significant additional and unwanted strain on a lot of practices, many of which are struggling to come to terms with the current payroll tax regime and which tend to average a profit margin of between only 3% and 7%.

From January this year the ATO’s new single-touch payroll mandatory reporting regime has made it much easier for Fair Work and the ATO to track and monitor the integrity of workforce payments, according to Mr Dahm.

With the increased digital auditing capability and vigilance of the ATO it is more important than ever that practices check all their award staff payments and their contracts and ensure they are complying so they don’ t build up an error that could result in a big fine and the need to make a big one-off adjustment in the future.

David Dahm wrote in more detail about this issue on his HealthandLife blog recently HERE.

End of content

No more pages to load

Log In Register ×