The biggest changes coming in FY20

There are just a few more weeks until the new financial year starts on July 1, 2019, when a number of legislative changes will take effect. From the minimum wage increase, to further penalty rate reductions, to new requirements around supply chain reporting, many of these changes will have a significant impact on the retail sector.

While the end of the financial year is a busy period for most businesses, it’s important that organisations carve out some time to ensure they are compliant with the coming changes. Besides the legal implications of not doing so, retailers will want to account for some of these changes in their 2020 budgets.

“Retailers need to be aware that if they’ve not updated things like wages in particular there can be major consequences,” Russell Zimmerman, executive director of the Australian Retailers’ Association, told Inside Retail Weekly. “It’s vital to remain on top of these changes.”

Given the number of changes taking effect on July 1, Zimmerman recommended that retailers consult their industry body if they have any questions. He said they should also look for updates from their industry body about how these changes will affect their business.

In the meantime, here is an overview of the biggest changes, and what they will mean for retailers in FY20.

Wages

Several changes will be made to wages on July 1. The minimum wage will increase by 3 per cent to $19.49 an hour, or $740.80 a week, offset by the next phase of Sunday penalty rate reductions going into effect. Full-time and part-time retail workers will earn 165 per cent of their base pay rate for Sunday work in FY20, down from 180 per cent last financial year. Casual employees will earn 190 per cent of their base pay rate, down from 205 per cent.

This is the second stage of the Fair Work Commission’s incremental reduction in Sunday penalty rates, which started in 2018. The final cuts will be made on July 1, 2020, when full-time and part-time workers will earn 150 per cent of their base pay rate for Sunday work, and casual employees will earn 175 per cent.

David Sztrajt, senior associate at HR Legal, believes the Fair Work Commission lifted the minimum wage with these penalty rate cuts in mind. (Later in FY20, penalty rates will increase for casuals working after 6pm and on Saturdays.)

“Some employers would have thought [the minimum wage increase] is a little bit high, but I’d have to say the Fair Work Commission went with that 3 per cent figure with the penalty rate transition in mind,” Sztrajt told Inside Retail Weekly. “I’d say it’s a fair, safe increase.”

Sztrajt said the retail sector has come a long way to ensure wage compliance since the introduction of the modern award in 2010, so retailers shouldn’t have any issue implementing the minimum wage increase.

“The bigger challenge is whether the economy will continue to support retail growth,” he said.

Modern Slavery Act

Starting July 1, some retailers will face new requirements to report on modern slavery in their supply chains, after the Modern Slavery Act 2018 was passed by parliament last November.

The law requires organisations with turnovers of more than $100 million to submit annual reports detailing slavery risk in their supply chain and what they’re doing to stamp it out. Organisations with turnovers of more than $50 million and employ anyone in New South Wales will also have to submit annual reports under the state government’s own Modern Slavery Act.

The deadline for the first report is six months after the end of CY19 or FY20, depending whether the organisation reports earnings on a calendar or financial year basis. While the federal law technically went into effect on January 1, 2019, for those retailers that follow the financial year, the first modern slavery reporting period will begin next month.

Nicole Thomspon, senior sustainability consultant at Edge Environment, says the first step is to simply assess the risk of modern slavery in your operations and supply chain.

“For retail, there’s risk in the products you’re purchasing from overseas, and risk in your direct procurement of services, like security or cleaning contracts or landscaping. Nail salons are being highlighted as risky businesses, as is any area where there may be risk of migrant labour,” Thomspon told Inside Retail Weekly.

While supply chains are notoriously murky, Thomspson said organisations are expected to assess their entire ecosystem.

“It’s expected that you’ll try to understand all tiers,” she said, though she admitted it’s a “huge ask” for organisations to know every level of their million- or billion-dollar supply chain.

“It’s about prioritisation. No one’s asking you to solve this problem overnight, it’s about understanding where the risk lies and prioritising certain risks and having a plan in place.

Whistleblower policy

Stronger protections for whistleblowers will take effect from July 1, when all public companies, large proprietary companies and corporate trustees of registrable superannuation entities will be required to have a whistleblower policy under the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019.

Large proprietary companies are defined as businesses that satisfy two of the following conditions: they have consolidated revenue in excess of $50 million, consolidated gross assets of more than $25 million, or at least 100 employees.

While this change isn’t specific to the retail sector, many retail organisations will be affected.

“Even if the whistleblowing legislations do not directly apply to your business, it is useful for retailers to have a policy in order to ensure they can take action when necessary,” Messina Angelis, senior employment relations adviser at Employsure, told Inside Retail Weekly.

“Having a policy also increases awareness and helps protect businesses against rogue actors and serves a critical role in the creation of a compliance culture.”

Angelis noted there are many areas of potential exposure in the retail sector, including work health and safety, food safety, nefarious dealings with external contractors, suppliers and shareholders.

Other changes

Some other changes coming on July 1 include a ban on paying cash for purchases over $10,000 and new rules for importing tobacco. With some exceptions, importers now will need to have a permit, and they will need to pay customs duty at the time of importation.

Arguably, the biggest change to impact retailers in the new financial year is Prime Minister Scott Morrison’s $158 billion tax cut package. The cuts, which are expected to boost consumer spending, were initially promised to take effect from July 1, but at the time of this writing it appears they will be delayed.

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