How the 2014/2015 Budget Measures up for Employers

by K&L Gates LLP

The 2014/2015 Federal Budget (Budget) has introduced a number of important reductions, incentives and clarifications impacting employer initiatives, employee remuneration and benefits and the legal framework in which employment related disputes are resolved.

The key aspects of the Budget that impact employers are outlined below.

Payroll Matters

Superannuation Guarantee Rate

While the Budget confirms that the superannuation guarantee rate will continue to increase incrementally from 9% to 12%, it will do so over a deferred timeframe.

The superannuation guarantee rate was initially set to increase incrementally from 9% to 12% between 2013 and 2020. The Budget has deferred increases so:

  • the superannuation guarantee rate will increase from 9.25% to 9.5% on 1 July 2014 as currently legislated
  • the superannuation guarantee rate will remain at 9.5% until 30 June 2018 when it will re-commence incremental increases at a rate of 0.5% per year until it reaches 12%. 

Effective Date: 1 July 2014

Superannuation Excess Contributions Tax

The Budget introduces an option for employees to withdraw excess non-concessional superannuation contributions made from 1 July 2013. The withdrawn excess contributions will not be taxed at the excess non-concessional contributions tax rate (47% from 1 July 2014) that previously applied.

Details of this initiative have not yet been finalised and will be settled following a consultation process.

Effective Date: Applies to excess non-concessional superannuation contributions made from 1 July 2013

HELP Debts

The rate triggering the requirement of an employee to start repaying their HELP debt has been reduced to AUD50,638 per annum (currently AUD51,309 per annum).

Effective Date: 1 July 2016

Employee Entitlements

Paid Parental Leave

The Budget confirms (and in some case varies) aspects of its signature Paid Parental Leave Scheme set to commence on 1 July 2015:

  • the income cap (originally pegged at AUD150,000) has been reduced to AUD100,000 per annum (inclusive of superannuation). This means eligible parents earning up to AUD100,000 will receive their full replacement wages for up to six months. Employees earning over the AUD100,000 income cap will remain eligible to receive paid parental leave under the Paid Parental Leave Scheme, however will not do so at their 'full replacement wage' rate but rather at the capped rate 
  • the maximum payout under the Paid Parental Leave Scheme is AUD50,000, ie representing six months' wages for an employee earning the AUD100,000 income cap (down from the AUD75,000 set in the Coalition's Policy for Paid Parental Leave August 2013)
  • the reduction in the company tax rate by 1.5% percentage points will offset the cost of the 1.5% Paid Parental Leave levy imposed on large companies (those with taxable incomes of greater than AUD5 million).

Effective Date: 1 July 2015

Alignment of redundancy payment scale under the Fair Entitlements Guarantee Scheme with the National Employment Standards (NES)

Under the Fair Entitlements Guarantee Scheme, employees with unpaid employee entitlements claims resulting from insolvency or bankruptcy will be entitled to claim unpaid redundancy entitlements calculated in accordance with the NES redundancy scale. Employees seeking to claim redundancy pay entitlements that exceed the NES redundancy scale will maintain rights as creditors to seek outstanding entitlements through the winding up of their employer's business.

Effective Date: 1 January 2015

"Fostering a Work Culture"

Mature Workforce Incentive

Through the new Restart Programme, employers will be incentivised to employ people over the age of 50 and who have been on income support for at least six months.

Employers who hire eligible mature aged employees will receive a subsidy of up to AUD10,000 over a 24 month period (pro-rated for part-time employees).

The Mature Workforce Incentive may give human resources practitioners responsible for implementing diversity policies and programs the financial incentive they need to obtain business approval for age related initiatives.

Effective Date: 1 July 2014

Industry Skills Fund

An Industry Skills Fund will be established to support the training needs of SMEs. The target industries identified include health and biomedical products, oil and gas equipment technology and advanced manufacturing. The Industry Skills Fund aims to provide approximately 121,500 training places to provide employees with qualifications and training and approximately 74,300 support services opportunities (ie mentoring and foundation skills).

VET Reforms

The Budget introduces significant funding to progress reforms to the Vocational Education Sector (VET). The objectives of the reforms include creating a higher quality VET sector that delivers relevant qualifications and programs for employers and industries.

Our Workplace and Safety Regulators

Fair Work Commission, Fair Work Ombudsman and Safe Work Australia

The Budget's reduction in public service staffing levels and the abolition of 70 agencies has little impact on the Fair Work Commission, Fair Work Ombudsman and Safe Work Australia which have escaped significant budget or staffing reductions.

Australian Human Rights Commission

The Budget reduces the number of Australian Human Rights Commissioners by one, abolishing the Disability Discrimination Commissioner position.

While a reduction in Commissioners may arguably impact on service delivery and timeframes in the Australian Human Rights Commission, the Budget notes that the initiative will "increase efficiencies".

Effective Date: July 2014

Administrative Appeals Tribunal (AAT)

The AAT, along with the other Commonwealth merits review tribunals (with the exception of the Veterans Review Board) will be amalgamated into a single body. The amalgamation is expected to reduce duplication, improve coordination and increase efficiency in how public funds are used to deliver services to the community.

Effective Date: 1 July 2015

Red Tape Reductions

The Government has committed to a target of reducing regulatory compliance costs on businesses, individuals and the community by AUD1 billion each year. Compliance costs will be required to be calculated for all new regulatory proposals. Proposals that increase regulatory costs will only be implemented where offsetting cost reductions are found.

Employers optimistic that the Road Safety Remuneration Tribunal would soon be abolished may be disappointed by the Budget's allocation of additional funding to the tribunal for 2014 – 2015 of AUD84.8 million (up from AUD81.2 million).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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