Wage and Superannuation Increase from 1 July 2023 – Are you ready?

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If you or any other business owner you know is an employer, this information is important. Please feel free share this, as I have used numerous resources to demystify the coming changes. 

PAY RATE INCREASE 

On Friday 2 June 2023 at 10am Fairwork announced a minimum wage increase from the first wage payment on or after 1 July 2023. 

Employees covered by national modern awards will receive a 5.75% increase. 

‘Award Free’ employees fall under the national minimum wage as below: 

FULL TIME EMPLOYEES 
currently $21.38 per hour or $812.60 per week will increase from 1 July 2023 
to $23.23 per hour or $882.80 per week, effectively an 8.6% increase. 

CASUAL EMPLOYEES 
Are entitled to 25% loading on these amounts. 
$29.04 per hour or $1,103.43 per week. 

You cannot pay an employee a rate lower that the minimum wage as set out above. However, if you have an agreement with an employee where the rate is higher than the minimum rate you do not need to increase their rate of pay, unless the new minimum wage is above their current agreement rate.  

If QiBalance Bookkeeping is processing your payroll, there is nothing more to do as your employee rates of pay will be reviewed on 1 July 2023 and updated in Xero.  We will ensure each employee is being paid the correct rate of pay. 

If you are someone who likes all the nitty gritty details here is a link to the Summary of Decision – Annual Wage Review 2022–23 (fwc.gov.au) 

Fairwork has provided tools to prepare for this increase using this link: Get set for a minimum wage increase - Fair Work Ombudsman 

The Australian Taxation Office has advised that there are other changes to awards and workplace laws that take effect between now and 1 July.  

These include:  

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EMPLOYEE SUPER GUARANTEE INCREASE

Minimum employee Superannuation Guarantee (SG) will increase from 10.5% to 11% from wage payments on or after 1 July 2023. 

The minimum SG is calculated as a percentage of each eligible employee’s earnings (ordinary time earnings) to a complying super fund or Retirement Savings Account (RSA). 

To add this increase to your wages forecast simply take the total amount of SG paid to employees over a pay period and add 0.5% 

Annual Wages 1 July 2022 to 30 June 2023 $50,000 

Annual SG 1 July 2022 to 30 June 2023 $50,000 x 10.5% = $5,250 

Forecast SG 1 July 2023 to 30 June 2024 $50,000 x 11% = $5,500 

When engaging new employees be sure to factor in the new SG rate of 11%. Total wage package is Gross Wages + 11% SG. 

You can pay employee SG quarterly, monthly or at the time of processing each payroll. This ensures you are compliant with the ATO, smooths out cashflow and mitigates the risk of expensive administration costs, penalty fees and interest on overdue payments. 

If QiBalance Bookkeeping is processing your payroll, there is nothing more to do as SG will update automatically AND we will check each employee is being paid the correct amount. 

SG will continue to increase by 0.5% every year until reaching 12% in 2026. Click HERE to review the ATO SG percentage schedule. 

CASHFLOW FORECAST 

Another consideration is how this wage increase along with an increase in Super Guarantee is going to affect your business finances.

To book a 30-minute consultation with QiBalance Bookkeeping Principal BAS Agent click HERE.

Susan Holtmeulen will provide you with concrete figures for a consulting fee of $75.00. 

References: www.ato.gov.au; www.fairwork.gov.au; www.employmentinnovations.com ; www.bookwiz.biz