Award increase: November 1st, 2020
Each financial year an Expert Panel of the Fair Work Commission is required under the Fair Work Act to conduct a review of the national minimum wage.
This year, the Commission announced a 1.75% increase to the national minimum wage.
The increase is usually effective in the first full pay period on or after 1 July for all modern awards and the national minimum wage. However, due to the COVID-19 pandemic, this year is different. The Commission used the Australian Bureau of Statistics’ data to evaluate how certain ‘industry clusters’ have been affected. Overall, the impact of the coronavirus has not been consistent across sectors. This justified the conclusion of taking a “nuanced” approach to the timing of the increase. Essential services workers were the first to receive the increase on 1 July 2020, however, the Commission has staged the increase for those in other industries.
From the 1st November 2020, Group 2 Awards are being increased. There are over 60 awards in the Group 2 list including:
• Manufacturing and Associated Industries and Occupations
• Storage Services and Wholesale
• Pest Control Industry
• Clerks Private Sector
• Professional Employees
• Real Estate Industry
• Road Transport and Distribution
• Legal Services
(Please note, the final increase (Group 3 Awards) will apply effective 1st February 2021).
It is essential that all employers know which award applies to each of their employees. Given that most employees in Australia are covered by a modern award, employers should proceed with caution when taking the position that their employees are “award-free”.
Why it is important for businesses to determine award coverage?
• it will dictate the minimum rate that employees are paid,
• it will advise if it is a requirement under that modern award if employees are to be informed in writing of the award that applies to them and their classification level under the award
• employers can be subject to significant financial penalties for breaching this modern award obligation
Working out an employee’s classification level under the applicable award is complicated. Determining the correct classification level depends on several factors including (but not limited to):
• the duties they perform
• years of experience
• education and qualifications
There are often delicate provisions dealing with employee classifications, for example, requirements that junior employees are paid an adult rate of pay when driving a certain class of vehicle. If an employer classifies an employee as a Level 1 employee when they should be a Level 2 it is likely that the employee will have been underpaid.
Employer’s next steps:
• Check if your employees are covered by any of the Group 2 Awards
• Make sure the rates paid to your employees will still be high enough to meet the minimum requirements (including conducting a BOOT for annualised salaries)
• Understand and factor in what penalties, allowances and leave loading apply
• If you pay minimum wage rates, prepare to give your staff a pay rise effective in the first pay period on or after 1st November 2020
We frequently advise clients on award coverage and classifications, as well as on obligations under the Fair Work Act and other relevant legislation.
We perform audits of the rates of staff pays by conducting Better Off Overall Tests (BOOT).
We ensure that we advise business owners/management teams if their employees are being remunerated correctly or not.
We thoroughly check, even if businesses are paying over the minimum wage rates that the wage increase can be absorbed without making any changes to staff wages.
We work with our clients to implement control measures and remedy any shortfalls.
Our clients trust us to ensure that we are supporting them with their compliance regarding their Human Resource obligations.
If you need some help getting your head around this complex and time-consuming employer requirement or require HR support, please contact us via on (07) 3630 5695 or send us an Email to [email protected]