The Fair Work Commission has handed down its annual ruling on Australia’s minimum wage, raising it by 3.5 %.
The Fair Work Commission’s Minimum Wage Panel concluded that the prevailing economic conditions were positive, and that the increase would have a noticeable positive impact on the low paid.
From the first pay period commencing on or after 1 July 2018, the National Minimum Wage will increase to $719.20 per week, or $18.93 per hour.
What This Means For You
You will need to increase the Modern Award rates used for their internal and external on-hire staff to comply with today’s decision.
Annualised Salaries and Individual Flexibility Agreements
If you have 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 under Modern Awards should also check the Award requirements.
If you have an Enterprise Agreement, you will need to ensure the minimum base rates in the EA remain at least equal to the new Modern Award rates. If not, EA rates will need to be increased to match the Modern Award. The new Modern Award rates will also form the baseline for “better off overall” testing new EAs.
Today’s decision will impact most allowances as well as base rates. A number of 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. Expense related allowances are likely to increase in line with the relevant CPI index.
High Income Guarantee
Although not directly related to today’s decision, the High Income Threshold will also increase from 1 July 2018. Any employers who sidestep Award conditions by using High Income Guarantees to will need to check their agreed terms, to ensure they remain compliant and above the new threshold. If guarantee levels fall below the threshold, or lapse for another reason, minimum entitlements will revert to those in the Award (including, for example, overtime and penalty rates).