ANNUAL WAGE REVIEW RESULTS IN A 2.5% INCREASE TO WAGES
[ 08-Jun-2015 ] Athena Koelmeyer, Workplace Law
An Expert Panel of the Fair Work Commission (the Expert Panel) announced the outcome of their review of the national minimum wage (NMW) and modern award minimum wages.
As you may know, every year the Fair Work Commission is required to review the NMW and issue a NMW Order. The NMW is a safety net which applies to employees who are not covered by a modern award or enterprise agreement.
National Minimum Wage
This year, the Expert Panel determined to increase the NMW by 2.5% to $656.90 per week (or $17.29 per hour). In dollar terms, award free full-time employees will receive an extra $16.00 per week, or 42 cents per hour.
Modern Award Minimum Wage
The adult minimum wage for award covered employees will also increase by 2.5%. This increase will also apply to junior employees, apprentices and trainees. Through an adjustment of the Supported Wage System Schedule, employees with a disability will also benefit from the increase. Similarly, the increase will also be passed on to employees who work under a piecework system under a modern award.
By increasing the minimum wages in awards, this will also mean allowances based on the “standard rate” as defined by a modern award will also increase as a result.
Casual Loadings
For both award covered and award/agreement free employees, the Expert Panel determined to maintain the existing casual loading of 25%.
Special National Minimum Wages
The Expert Panel is to also set a special NMW for specified classes of award/agreement free employees.
For award/agreement free employees, the Expert Panel determined that the junior wage percentage scale as per theMiscellaneous Award 2010 would be used. In the same way, the minimum rates of pay for award/agreement free apprentices and trainees will be set as per the National Training Wage Schedule of the Miscellaneous Award 2010.
For award/agreement free employees with a disability, two special NMWs were set by the Expert Panel. For employees with disability without affected productivity, the NMW is to be used while for employees with a disability whose productivity is affected will be paid in accordance with the Supported Wage System Schedule, as assessed.
Interestingly, the increase of 2.5% to both the NMW and modern award minimum wages was less than last year’s 3% increase. The Expert Panel determined that ‘modest’ and ‘moderate’ increases to the NMW and modern award minimum wages were required after taking into considerate a range of economic and social factors.
Effect
The NMW Order reflecting the changes will be issued in late June 2015.
The new NMW and modern award minimum wages are to come into effect from the first full pay period on or after 1 July 2015
Absorption
It is important that employers review the wage increases in accordance with their industrial instruments and contracts of employment, as some may have an obligation to pass on the increase even if they are paying above Award rates of pay.
After assessing the new rates of pay with the increase, there may be some circumstances where an employer is still paying above Award. If a contract does not provide an obligation to the employer to pass the increase on, the employee’s above Award wage will simply absorb the increase in their current rate of pay and no change will be required. However, it is important for employers to regularly review an employee’s wage to ensure that they are being adequately compensated.