FWC lifts Minimum Wage by 5.2%

This morning, the Fair Work Commission announced its decision in the 2021-2022 Annual Wage Review. This has been the most anticipated annual wage review for some time given the recent commentary from our new Federal Government about ensuring that wage increases keep pace with inflation which is tracking at 5.1%.

This year, the decision has a few different elements in that FWC decided to:

• Award a $40 per week increase in the national minimum wage and award wages that are currently below $869.60 per week
• Award a 4.6% increase to award wages that are currently $869.60 per week or more
• Defer the operative date for a few industries (those in aviation, tourism and hospitality industries) to 1 October 2022
• Apply the increases for all other Awards from the normal date of 1 July 2022.

The $40 per week increase in the national minimum wage equates to 5.2% and increases it to  $812.60 per week or $21.38 per hour.

The new rates are payable from the commencement of the first pay period occurring one or after the relevant operative date.

For employers, the different scenarios that can apply are:

1. If you have employees who are covered by a modern award and you otherwise apply all of the terms and conditions of the award, you must ensure that employees are paid at least the award rate for their classification as adjusted for this decision.
2. If you have employees who are award free and not covered by an enterprise agreement, you must ensure that they are paid at least the National Minimum Wage as adjusted for this decision.
3. If you have employees who are covered by an award and you pay them on an annualised wage basis or on a salary or all purpose rate which sets off certain monetary employment conditions such as annual leave loading, overtime and shift loadings, penalty payments and allowances, you need to recalculate the rate of pay to ensure that the employee remains better off overall against award entitlements and comply with any award provisions that might apply to annualised wage arrangement.
4. If you have employees who are covered by an enterprise agreement which provides for annual adjustment of wages in line with Annual wage Review decisions of the Fair Work Commission, you need to adjust wages by the designated amount or percentage from the operative date for the relevant award.
5. If you have employees who are covered by an enterprise agreement but the agreement does not provide for annual adjustment as per 4, you need to ensure that wages paid are at least equal to those applying to the underpinning modern awards or the National Minimum Wage as applicable from the relevant operative date.
6. You need also to have regard to any provisions in employment contracts which might provide an obligation to pass on any increases separate from or additional to any of the above scenarios.

Please also note that there have been a number of changes to the Fair Work Act and modern awards since the last Annual Wage Review.

This likely also means that you will need to review your employment contracts, something that we recommend that you do at least once a year in any case.

If you need assistance in understanding and applying the effects of this decision in your business, we are happy to assist. We offer a free initial phone consultation if this is of interest to you. Contact us at 0438 533 311 or enquiries@ridgelinehr.com.au.