Minimum wage increase
1.4 million workers awarded 3.4% increase
Workforce Guardian - Australia's leading online employment relations service for employers
Fair Work Australia has announced that the country's minimum wage workers will receive a pay rise of $19.40 a week, increasing the federal weekly minimum wage to $589.30 ($15.51 an hour) from 1 July 2011.
This year's minimum wage decision also benefits workers earning Modern Award minimum wages with a 3.4% wage rise. This will mean a weekly pay increase of at least $19.40 while those on some Modern Awards can expect significantly more.
While the Fair Work Ombudsman is in the process of updating all relevant pay tools, pay and conditions guides and fact sheets for the 1 July kick off, this decision will increase the wages of about 1.4 million workers who are either on the minimum wage or rely on Modern Awards for their pay. And although this $19.40 a week increase falls short of the $26 increase given last year, the 3.4% hike across all Modern Award base rates will add substantially to employer costs.
In a statement explaining the rationale for the decision, Fair Work Australia highlighted that increases to award rates over the last twenty years has compressed award relativities in the award classification structures. "The position of the higher award classifications has also been reducing relative to market rates and to average earnings. Furthermore, while the real value of minimum wages has been maintained at the lower award classification levels, it is clear that the real value of minimum wages above those levels has fallen."
Individual Flexibility Agreements
For employers who have implemented Individual Flexibility Agreements or apply annualised salary arrangements, you need to reassess these agreements to ensure that employees are better off overall when compared to the applicable Modern Award.
Another point to note is that while the High Income Threshold is currently set at $113,800 we are still awaiting news of the level for the coming financial year. The announcement by the Department of Education, Employment and Workplace Relations (DEEWR) will be important as the High Income Threshold impacts unfair dismissal claim eligibility and undertaking an annual guarantee of earnings
For many small businesses in retail, hospitality, tourism and manufacturing that are just emerging from a significant downturn, this increase is going to be very hard to bear. Already retail groups are warning of job losses and reduced working hours.
As an employer, if you pay employees under Modern Awards or in accordance with the national minimum wage, you need to ensure the revised pay rates are implemented from 1 July 2011.
As a subscriber to Workforce Guardian you can access all updated Modern Awards from the service as and when they become available. If you are at all unsure how the increase in the minimum wage affects your employees, please make use of our "Ask an ER Expert" email service or use the Modern Award Finder Service which is provided free of charge for all our subscribers.
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This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd (http://www.workforceguardian.com.au/) is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.