Award rates, allowances and minimum wage to increase by 3.5% - 1 June 2018

Earlier today, the Fair Work Commission Expert Panel for annual wage reviews issued a decision and national minimum wage order increasing the Federal Minimum Wage by 3.5 per cent.

The increase applies to minimum wages for all employees, including casuals, junior employees, trainees and apprentices, employees with disability and to piece rates.

The national minimum wage will be $719.20 per week, or $18.93 per hour. This constitutes an increase of $24.30 per week or 64 cents per hour.

Minimum award wages will also be increased by 3.5 per cent, with weekly wages to be rounded to the nearest 10 cents.

If an enterprise agreement applies, and the employees would otherwise be covered by an award, employers will need to ensure that the employees’ base rate of pay under the enterprise agreement is not less than the base rate of pay that would be payable to the employees under the applicable underpinning award.

The changes take effect from the first full pay period to commence on or after 1 July 2018. 

In setting and maintaining the federal minimum wage, the Expert Panel must take into account:

  • the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; 
  • promoting social inclusion through increased workforce participation; 
  • relative living standards and the needs of the low paid; 
  • the principle of equal remuneration for work of equal or comparable value; and
  • providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

The increase is more than last year's increase of 3.3 per cent, but is significantly below the $50 a week the ACTU sought, being an annual wage increase of 7.2 per cent. However, it is significantly above the 1.8 per cent (or $12.50 a week increase) that the Australian Industry Group campaigned was all the economy could afford. 

In coming to their decision, the Expert Panel concluded, at paragraph [60], that: 

“Compared to the position at the time of the 2016–17 Review, the economic indicators now point more unequivocally to a healthy national economy and labour market. The recent data has shown strong growth in full-time employment together with a high participation rate.”

What should employers do?

Employers should take steps now to review their employees’ pay rates, taking into account the Federal Minimum Wage or applicable award or enterprise agreement classification to ensure that they are at least meeting the increased minimum rates of pay. 

Please contact HopgoodGanim’s Employment Law team if you have any questions.

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