By Zaynab Aly
The Fair Work Commission’s (FWC) Minimum Wage Panel (Panel) handed down its minimum wage decision on June 15, which increased the National Minimum Wage by 5.2 per cent and the Award Minimum Wage by 4.6 per cent for classifications where the rate of pay is $869.60 per week or more, and a $40 increase per week for anyone below.
In this article, we break down the decision, share the timing of these increases, and explain what it all means for you.
The Panel acknowledged a range of factors affecting the decision on minimum wage, including inflation, recovery from the COVID-19 pandemic, and low unemployment and underemployment rates.
Upon this basis, the Panel determined that a 5.2 per cent increase was justified and necessary in the circumstances which will result in the National Minimum Wage increase to $812.60 per week or $21.38 per hour.
The Panel’s decision was to the effect that all permanent full-time Modern Award and Minimum Wage earning employees would receive an increase of at least $40 per week. This means that for Modern Award pay rates below $869.60 per week, the flat $40 increase per week applies, and for those Modern Award pay rates of $869.60 per week and above, the increase is 4.6 per cent.
Timing of increases
For most of the Awards, the FWC found that there were no exceptional circumstances which could justify a delayed implementation of wage increases. However, there was an acknowledgement that the aviation, tourism and hospitality industries were experiencing exceptional circumstances warranting a deferral of the increases. The Awards affected by this are listed below and the increases will apply to these Awards from the first pay period commencing on or after 1 October 2022:
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Air Pilots Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Alpine Resorts Award 2020
- Hospitality Industry (General) Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Registered and Licensed Clubs Award 2020
So, what does this means for you?
Employers who pay their employees at the National Minimum Wage or Modern Award rates of pay will need to apply the increase upon the dates outlined above.
Annualised Salaries and Individual Flexibility Agreements
If you’ve implemented Individual Flexibility Agreements, you will need to reassess those agreements to ensure employees remain better off overall when compared to the newly increased Modern Award rates. Employers who use annualised salary arrangements will need to conduct an audit of those annualised salaries against the new Award rates and working patterns to ensure the annual salary compensates for award entitlements.
The new Modern Award rates will also form the baseline for the better-off overall test when it comes to new Enterprise Agreements (EA). If you have an EA in place, you’ll need to ensure the minimum base rates in the EA remain at a minimum equal to the new Modern Award rates. If not, EA rates will need to be increased to match the Modern Award.
The decision will impact most allowances as well as base rates. Several Modern Award allowances are expressed as a percentage of the standard rate, which is linked to the wage rate of a specific classification in the Award. These allowances will, therefore, increase in line with the increase in the standard rate.
HR Assured appreciates the challenging economic environment in which businesses are currently operating and can help you understand how this decision affects your business. If you would like assistance in understanding how minimum wages work, auditing, calculating pay rates and assistance with implementing an appropriate strategy, please contact our 24/7 Telephone Advisory Service.
Zaynab Aly is a Workplace Relations Consultant at HR Assured. She has a particular interest in the retail industry and regularly provides advice on workplace matters to find solutions for clients.