WHAT BUSINESS OWNERS NEED TO KNOW
As a business owner, it’s important to stay informed about any changes to employment laws and regulations. Two important changes that you need to be aware of are the National Minimum Wage Increase and the Super Guarantee Increase for the 2023/24 Financial Year.
The increases are set to take effect from the 1st July 2023. As a business owner or someone in charge of payroll at your workplace, you should consider the impact of these changes on the business and how to best communicate any changes with your employees.
1. SUPERANNUATION GUARANTEE INCREASE
The Superannuation Guarantee (SG) is the amount of money that employers must contribute to employee retirement plans. Typically, employers are required to contribute 9.5% of an employee’s ordinary income to their retirement plan.
Currently, a proposed Super Guarantee Increase would see this contribution increase to 11% in July 2023, with incremental increases up to 12% by July 2025. Some business owners have raised concerns around the affordability of these increases, particularly for smaller businesses.
With the Super Guarantee increase changing to 11% for all pay runs paid on or after 1st July 2023, it’s worth being aware of the potential impact on your business. Calculating the cost of this increase is an important step in working towards meeting the expected changes.
2. NATIONAL MINIMUM WAGE INCREASE
The National Minimum Wage is the minimum amount that employers can legally pay their employees. It’s reviewed annually and following the Annual Wage Review 2023, the Fairwork Commission announced that it is set to increase by 5.75% on July 1, 2023. This will see the National Minimum Wage increase to $882.80 per week or $23.23 per hour (+loading).
For businesses with employees on the minimum wage, this will have an impact on your payroll costs. It’s important to factor these changes into the cost of doing business and make appropriate adjustments.
3. HOW BUSINESSES CAN PREPARE FOR THESE CHANGES AND FUTURE CHANGES
Businesses should start looking towards what the Super Guarantee Increase and the National Minimum Wage Increase mean for the next calendar year, and make the necessary projections. Take stock of your current spend patterns and determine if there is room to accommodate the increase.
Look also into your current systems to make sure they can handle the increase without disruption. It’s important to be able to effectively monitor and report on changes to the wage, as well as ensuring that your payroll process can handle any additional costs associated with the Super Guarantee Increase.
4. COMMUNICATING WITH EMPLOYEES
It’s important to keep everyone informed – from finance to HR, to the front desk. Openly sharing the need to adjust the company’s wage budget in favour of the upcoming increases can also be a way to demonstrate the value of the employees and put everyone on the same page with the task at hand. Dedicate an internal communication meeting or forum to discuss the changes that are coming, any action they can take to reduce cost and how your business intends to implement any changes.
Changes to the National Minimum Wage and Super Guarantee can have a significant impact on businesses, particularly smaller businesses. As an employer, it’s important to be aware of these changes and prepare accordingly. Ensure systems can handle the increase in payments, make necessary projections in business plans and above all, communicate well with your employees.
By staying informed and planning effectively, businesses can be ready to meet these changes head-on, rather than being caught off guard. Take measures to ensure that your business can continue to operate smoothly and be able to meet such obligations in not just 2023, but any and all future updates and changes to the rates.