On 31 May 2016 the Australian Fair Work Commission issued its Annual Wage Review decision, increasing the national minimum wage by 2.4%. This means that the minimum wage will increase by $15.80 per week from $656.90 per week to $672.70 a week.
This change will come into effect on 1 July 2016, and impacts upon over 1.86 million Australian workers who are remunerated on the basis of minimum rates of pay. These are those workers covered by modern awards and by enterprise agreements, which need to meet the “better off overall” test. This means that while enterprise agreements can vary award conditions to better suit an individual business, this can only be done if the remuneration and employment conditions are better than if the employees were covered by the relevant award.
The decision was reached in consideration of the current economic climate and low levels of inflation and wage growth. The Commission noted that female employees are ‘over-represented among the award reliant and low paid’, and accordingly a rise in award wages may assist the gender pay gap. Further, the Commission noted that whilst inflation is at a historically low level, wage growth is also low and the ‘relative position’ of low paid workers has declined over the past 10 years. The impact of this is that some award-reliant households have incomes that place them below the poverty line.
The Commission is also considering changes to penalty rates, as part of its 4 years review of modern awards. This review includes the hospitality, licensed club, fast food, restaurant, retail, hair and beauty and pharmaceutical industries. The outcome of that review will be released in the following months, most likely after the July 2 federal election.
All employers should be aware of these changes to the minimum wage and modern awards rates, and flow on effect on enterprise agreements, and ensure that wages are increased from the first pay period after 1 July 2016 where appropriate.
If you would like to discuss your employment arrangements further, including enterprise agreements, compliance with modern awards or any other employment and industrial relations issue, our expert team of lawyers can assist you. Contact our employment law team today.