Welcome to On Demand HR’s roundup for June 2022 where we review the major HR & Workplace Relations Challenges facing businesses.  Of course, if you would like to go into more depth on each of the topics we are going to cover today, we have discussed them individually on or website at www.ondemandhr.com.au.

Recruitment continues to be a challenge in June for businesses which is likely to continue for the foreseeable future.  Our monthly recruitment market update showed all indicators pointing towards the candidates market continuing.  

This was headlined on the supply side by record low sub 4% unemployment continuing, record high number of people employed, record number of hours worked, record low underemployment rate and continued low international migration.  So in summary extremely short supply in the labor market.

On the demand side, we saw record job listings across the in the seek data with strong increase in demand in the Hospitality, Tourism and Retail sectors which is no doubt as a result of the lack of international migration which normally tops up labor supply in these sectors.

To put the situation into context, Business NSW estimated in June 2022 that 72% of NSW businesses have had at least 3 failed recruitment campaigns over the past 12 months and described the current climate as “facing it’s most significant workforce challenge in more than 50 years”.

The key message is that your business cannot do much to influence these macro challenges in the recruitment market and must instead focus on factors within your control such as changing and adapting your recruitment processes to suit the current market.  Doing things the way that you have always done them in terms of recruitment is a sure fire recipe for disaster. 

Many of us may have heard about the Great Resignation predicted to occur in Late 2021 / Early 2022. In our view, 2022 may better become known as the Great Retention, we encourage you to take a look for a video of that title on our website as we cover this in detail.

We unpacked some of the strategies that we are recommending to our clients who understand that retaining their key staff is just as important as attracting new talent to their business.  They understand it is far more expensive to recruit and train new staff and that their competitors are eying off their top staff to resolve their own recruitment challenges.

The number one recommendation following the great work from home experiment known as Covid 19 is workplace flexibility.  Throughout our daily dealings with hundreds of candidates across a wide cross section of industries in our recruitment campaigning efforts for our clients, this is one of the most common questions that we receive.  If this question is being asked by candidates and being offered by your competitors, what makes you think that your key staff are going to hang around if they are being directed to come to the office 5 days per week?

Alongside this market lead push towards workplace flexibility, we often have discussions around the requirement for line managers to develop and grow their skillsets to effectively manage their teams in a remote or hybrid scenario.  We have often seen situations where the strategic direction of the business has been to offer workplace flexibility but this has not been seen on the ground due to line manager reluctance or inability to adapt their management style.  

When it comes to The Great Retention of 2022, we again spoke about the importance of regular and comprehensive salary benchmarking to ensure that your current employees are being paid at a competitive market rate.  The key message here is that in our observation, salary expectations are moving faster than is being reported in the wage growth data.  As a result, businesses who are still sticking to an annual salary review are at risk of their wages being out of line with the market and their employees looking for greener pastures elsewhere.  

Finally, when it comes to the Great Retention, we shared that some of our clients are looking to “potentially” tax effective ways in which they can reward and retain their staff.  We spoke about offering to pay for ongoing training noting that there are some elevated tax breaks available.  We even have clients who are considering offering fuel cards to their employees to offset their commuting costs.  Be as creative as you like, however we would encourage you to consult with your accountant prior to putting any of these measures in place.

We reminded clients in June that the employer superannuation contribution rate increased from 10% to 10.5% as of 1 July 2022.  This is part of the gradual increase to a target rate of 12% which is legislated to come into effect on 1 July 2025.  For reference, the gradual increase will see a 0.5% increase each financial year.

The second change that is coming into effect is the removal of the $450 per month threshold for superannuation guarantee eligibility.  This change effectively sees that all wages earnt by all employees qualify for the superannuation guarantee.  For businesses this may pose an administrative burden for very short term or sporadic employees particularly with the choice that employees have regarding superannuation funds.

Finally for this HR Roundup, June 2022 saw the announcement of the National Minimum Wage increase.  To summarize the decision, the National Minimum Wages have increased by 5.2% to $21.38 per hour for full time employees and $26.53 for casuals once the 25% casual loading is factored in. 

However, what has not been widely reported is that this headline increase of 5.2% does not apply to all Award covered employees, specifically Award covered employees earning more than $869.60 per week.  For these employees the decision awarded a lower increase of 4.6%.  

The award increases are also staged in their roll out with some awards not having the increase applied until October 2022.  Most notable of these awards include the Hospitality, Clubs & Restaurant industries which have been given a little longer to recover from Covid. 

In our more detailed video on this, we discussed some of the action items that businesses should undertake in response to the National Minimum Wage Decision which you can find on our website www.ondemandhr.com.au and searching for “Minimum Wage Increases 2022”.

To summarize, outside of ensuring that any award paid employees are passed on the relevant increases, there were a couple of other areas where we received challenging questions from our clients.  These included clients that were subject to an Enterprise Bargaining Agreement where the National Minimum Wage Increase brought their EBA below the Modern Award for some classification.  

The other area where there was a little bit of confusion was with regards to Annualized Wage / Salary Agreements.  Essentially, it is a requirement among many widely used awards for employers to specify the maximum amount of additional hours that a salary employee can work before overtime is payable keeping in mind that this must always be subject to a better off overall test against the Modern Award.   In some cases, employers were required to reduce the maximum number to remain complaint.

So that is a wrap for our HR Roundup for June 2022.  No doubt there are a lot of changes there both legislative and market based that are going to pose some challenges for businesses throughout July and the reminder of 2022. To assist with this and to stay true to our promise to deliver your business certainty, confidence and clarity when it comes to your HR & Workplace Relations affairs, let me introduce some of our team who will explain our fee HR Consultation and Strategic Action plan.