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The biggest increase in minimum wages ever

by | Jun 4, 2023 | C1: Commitment, Fair Work, News, Wage Obligations

superannuation changes

On Friday 2 June 2023, the Fair Work Commission handed down this year’s Annual Wage Review and it delivered the biggest ever increase in the federal minimum wage and award rates.

The Minimum Wage Panel decided to do it in two steps:

  1. To award a 5.75% increase in minimum wages in modern awards (up from last year’s 4.6%) and
  2. To raise the benchmark for the Federal Minimum Wage from the rate for classification C14  to the rate for classification C13 under the Manufacturing and Associated Industries and Occupations Award 2020 causing an aggregate increase of a record 8.65% (up from last year’s 5.2%) in the federal minimum wage and the lowest rung of award rates.These increases will apply from 1 July 2023 when the federal minimum wage will move up to $23.23 per hour (plus 25% for a casual employee).

A 0.5% increase in the superannuation guarantee rate will also apply from that date when it moves to 11% of ordinary time earnings.

Impact of raising the benchmark for the federal minimum wage

The lowest classification level in many awards has historically been at the level of the federal minimum wage. This level has commonly been applicable to new employees to an industry while they undergo basic training which, depending on the award, might be for a maximum of between 38 hours and 3 months.

So it generally has quite limited application in practice albeit that in industries where there might be high utilisation of casual and seasonal employees entering the workforce e.g. in hospitality, restaurants, alpine resorts, horticulture or wine industries.

Other industries with similar features like retail and fast food already have minimum award rates that are significantly above the federal minimum wage and so are not as affected by the decision to raise the benchmark.

What employers need to do

Regardless of whether you engage people on award rates or on overboard payments or on annualised salaries or wages or some other remuneration arrangement and whether that is based on a modern award or an enterprise agreement or a common law contract or a handshake (which really is a common law contract anyway), you need to review all of that to ensure that your remuneration levels remain at or above award rates from 1 July 2023.

It is also a good idea to review your employment contracts while you are at it.

Need help?

Give us a call on 1300 108 488 to arrange your free first consultation to see how we can help with advice and support on this or any other HR matter. 

 

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