Minimum Wage Staggered Increase
Last Friday, 19th June, the Fair Work Commission announced its’ decision for the annual minimum wage increase. The national minimum wage has increased by $13 a week, or 1.75%. The new minimum wage will be $753.80 per week or $19.84 per hour for fulltime employees. In comparison to last year’s 3% wage increase, 1.75% seems low. As our economy is in a significant downturn and the unprecedented shock to the labour market due to the effects of coronavirus, it’s understandable that it’s a lot lower than in previous years. The increase will result in pay rises for more than 2.2 million Australians who have their pay set by awards that rise in line with the decision.
The FWC has taken a “cautious approach” to both the timing and size of the minimum wage rise due to the economic environment and tax and transfer changes i.e. JobKeeper and JobSeeker schemes. The ACTU applied pressure to the FWC to increase wages by 4% to improve the living standards of our lowest paid workers. On the other hand, further industry groups promoted that wages should not increase to sustain labour costs and to keep people in jobs. This pressure, along with COVID-19 considerations, led the FWC to apply a staggered approach to the increases lessening the impact to the worst affected industries. The decision was to delay the increase for the hardest hit sectors such as tourism, retail, and hospitality.
Staggered wage increase dates
The staggered wage increases are as below.
Group 1 – 1 July 2020
Human services and frontline workers (essential service workers) will benefit immediately. These workers include:
- Frontline health care and human services
- Childcare and education
- Other essential services
Group 2 – 1 November 2020
- A range of other industries
Group 3 – 1 February 2021
- Accommodation and food services
- Arts and recreation services
- Retail trade
What do employers need to do?
So, what do you need to do as an employer? You will need to ensure that your obligations are met and that you aren’t underpaying your staff. Underpayment of wages is a breach of the Fair Work Act and can result in hefty penalties to your organisation.
As a business owner, you will need to:
- Check that your employees are being paid the correct rates of pay
- Check employment contracts to ensure that the correct award provisions are stipulated
- Ensure that the new pay rates are applied at the correct start date
The increase doesn’t affect those workers earning more than the minimum wage or award rates. However, employers must bear in mind that with the recent legislated changes to annualised salaries, it is paramount that overtime and/or penalty rates are recorded and tracked. Employers must ensure that any employment agreement results in the employee being better off overall at the time the agreement is made than if the agreement had not been made.
The most effective way of determining if you are paying your employees correctly is to conduct a Better Off Overall Test (BOOT) every 6-12 months. The BOOT will allow award conditions (but not National Employment Standards (NES) standards) to be traded or excluded provided that the total remuneration and/or benefits received by the employee leave them better off overall.
Need help with all of this? Bramwell Partners is here to provide support and the right advice to ensure that your business is protected. Our compliance professionals are here to assist you with your business requirements. Call us today!