Minimum rate rises revealed for Legal Services Award

Minimum rates for Levels 1 to 6

As from 1 July 2016, new minimum rates for the Legal Services Award will increase by 2.4 per cent (click here for full spreadsheet, ‘Legal Services Award – Annual Minimum Wages with 1 July 2016 Wage Rise’). These are payable in the first full pay period starting on or after 1 July 2016. Please note, this year Fair Work has advised that weekly rates need to be rounded to the nearest 10c, and this means the weekly rates are not increased by exactly 2.4 per cent.

Minimum for a graduate working 38 hours per week

The minimum weekly pay rate for law graduates undertaking a traineeship is now $904.00 for a 38-hour working week and this is an annual minimum of $52,106.56 (including leave loading and 9.5 per cent superannuation).

Entitlement to overtime rates if paid minimum and working on average more than 38 hours per week

It is important to be aware that award-covered employees being paid the minimum rate are entitled to overtime rates if they always work more than the standard 38 hours per week. As an example, if a graduate lawyer (Level 5) always works 8.30am to 6.00pm with half an hour for lunch (45 working hours per week), they are entitled to a minimum annual salary of approximately $65,095.90. A graduate on minimum pay would be entitled to more additional pay if they worked longer hours or on weekends. It is important to monitor any annualised salaries to ensure that the employee is no worse off than they would have been if they were paid the minimum plus any overtime rates entitlements.

Junior rates of pay

Employees aged 20 or less can be paid junior rates of pay. These rates are a percentage of the applicable adult rates of pay per classification as stipulated in the Legal Services Award.

For further information, the Legal Services Award can be found at https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000116/default.htm

The Fair Work Pay Guide for the Legal Services Award can be found at http://www.fairwork.gov.au/pay/minimum-wages/pay-guides#L

New national minimum pay rate

Award-free adult employees must be paid a minimum of $672.70 per week, or $17.70 per hour. For further information, please visit https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/get-set-for-a-2-4-wage-increase-2016-annual-wage-review

High income threshold for 2016-17

From 1 July 2016 the high income threshold increases to $138,900, meaning employees who are award-free and earning less than this can make unfair dismissal claims.  The same figure is used for guarantees of annual earnings. The high income threshold does not include all amounts paid to an employee. The compulsory 9.5 per cent superannuation, bonuses or overtime payments are examples of what is not included.

Unfair dismissal compensation limit

The compensation limit under unfair dismissal is 26 weeks and the maximum payment increases to $69,450.

Tax-free threshold for redundancy payments and early retirement schemes

These rates have increased from 1 July 2016 to $9936 plus $4969 for each year of completed service.

For further information, please visit https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=19#Tax_free_part_of_genuine_redundancy_and_early_retirement_scheme_payments

Superannuation

The Superannuation Guarantee Levy remains at 9.5 per cent.

Prepared by Kriss Will, Kriss Will Consulting Pty Ltd

27 June 2016

Disclaimer: Information provided here is intended to be of a general nature. No reader should rely on it without undertaking their own research or seeking expert HR and/or legal advice.