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What every employer MUST know for 1 July 2021

01-Jul-2021 11:59 | Tracy Dawson (Administrator)

With the commencement of a new financial year, it brings with it important changes and new rates which will apply from 1 July 2021.

NEW! High Income Threshold (HIT)

With the HIT:

  • it increases to $158,500
  • it impacts:

(a) who can make a claim for unfair dismissal (for those not covered by a Modern Award or to whom an enterprise agreement does not apply)

(b) the maximum amount of compensation payable in an unfair dismissal claim

(c) those on a 'guarantee of annual earnings' (a Modern Award does not apply to an employee whenever this guarantee is in place provided it continues to meet the relevant legislative requirements)

NEW! Changes to Casual Employment

These amendments to the Fair Work Act commenced on 27 March 2021 and include:

  • a statutory definition of a ‘casual employee’ for the first time
  • a requirement for an employer to issue a Casual Employment Information Statement
  • an entitlement to convert to full-time or part-time employment when certain conditions are met

NEW! Modern Award Increases

With Modern Awards (including enterprise awards):

  • minimum wages increase by 2.5%
  • the date this increase takes effect from is:

(a) for Group 1 Modern Awards, from the start of the first full pay period on or after 1 July 2021

(b) for the General Retail Industry Award 2020, from the start of the first full pay period on or after 1 September 2021

(c) for Group 3 Modern Awards, from the start of the first full pay period on or after 1 November 2021

  • absorption of wage increases into over-award payments remain permissible (subject to the terms of the relevant employment agreement and what other amounts are being absorbed into any annualised wage)
  • increases to the minimum wages of junior workers, apprentices, trainees, piece workers and employees on the supported wage system will occur
  • expense-related allowances in Modern Awards will increase as set out in the Modern Award (eg, by the applicable CPI index figure)
  • annualised wage arrangements will need to be reviewed to ensure they can still properly absorb/include all relevant minimum Modern Award amounts and that they continue to meet technical notification and reconciliation requirements previously introduced into several Modern Awards

NEW! National Minimum Wage (NMW)

With the NMW:

  • this is applicable to employees to whom neither a Modern Award or enterprise agreement applies
  • the NMW increases to become $772.60 (gross) per week or $20.33 (gross) per hour
  • the increase takes effect from the start of the first full pay period on or after 1 July 2021 (unlike the staggered increase applying to the Modern Awards)
  • in addition:

(a) special NMW rates apply to employees with disabilities, junior employees, apprentices, and those on training arrangements

(b) the minimum casual loading remains unchanged at 25%

NEW! Impact on Enterprise Agreements

With enterprise agreements:

  • they must always meet or exceed the minimum wage of:

(a) the relevant Modern Award (ie, the Modern Award that would have applied had the enterprise agreement not been in existence)

(b) the NMW (ie, where a Modern Award would not apply even if the enterprise agreement was not in existence)

  • thus, pay rates in enterprise agreements may need to be increased (even if the enterprise agreement has its own wage increase regime)

NEW! The Sting

Be mindful that wage increases may have flow-on effects such as increasing:

  • the value of leave loading, penalty rates, overtime and superannuation contributions
  • the value of accrued leave entitlements
  • the cost of wage related expenses such as payroll tax and workers compensation premiums

NEW! Redundancy

The tax-free component of a genuine redundancy payment increases to be:

  • a base amount of $11,341
  • an additional amount of $5,672 for each completed year of service

NEW! Superannuation Contributions Base

With superannuation:

  • the superannuation guarantee rate will increase to 10% from 1 July 2021
  • the maximum superannuation contribution base increases to $58,920 per quarter ($235,680 per annum)
  • an employer is not required to make superannuation contributions on behalf of employees on earnings in excess of that maximum contribution base

REMINDER! Annualised Wage Arrangements

As the annualised wage arrangements in several Modern Awards have changed, it is critical that employers:

  • check whether the applicable Modern Award(s) contain such a clause
  • ensure they comply with the terms of the annualised wage clause
  • adjust relevant clauses within the employee’s employment agreement (by consent) and any template employment agreements in order to meet those requirements

REMINDER! 2020 Modern Awards

Employers need to:

  • ensure they are using the correct (and current) version of the applicable Modern Award(s) as, over time, the 2010 editions have been replaced by 2020 versions (and even the 2020 versions are updated from time to time)
  • adjust relevant clauses within the employee’s employment agreement (by consent) and any template employment agreements in order to meet Modern Award requirements

More Information

With the industrial landscape constantly changing and the interaction between various sources of rights and obligations often complex, please contact us if you require any legal advice or assistance in respect of your workplace.

Stewart Gough


T 02 9806 7483 | M 0458 586 444


Peter Doughman

Senior Associate

T 02 9806 7412 | M 0404 020 409


Liability limited by a scheme approved under Professional Standards Legislation. This article is provided to readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as a definitive or complete statement of the relevant law.

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