Minimum Wage Increase: Are You Getting It Right?

As a business owner, you are probably aware that the national minimum wage increases every financial year. Are you confident that you are compliant?

Every year, the Australian Fair Work Commission reviews the minimum wage in line with the Fair Work Act 2009, noting various economic considerations, social inclusion factors and relative living standards.

In June each year, the Commission announces increases to the national minimum wage and modern award minimum wages. Generally, minimum wage increases that are handed down by the Commission as part of the annual wage review apply from the first full pay period starting on or after 1 July. This is convenient for businesses as they don’t have to worry about splitting up the payroll mid-cycle.

The annual minimum wage review is a chance to take stock and review your current workforce arrangements and requirements. This is even more important if you are currently in the process of budgeting and sorting your cash flow for the year ahead.

What employers need to consider

These are the top four actions that employers should consider to suitably respond to the minimum wage increase.

1. Review current workforce in line with award classifications

• Check the penalty rates section in the applicable modern award/s.
• Assess each worker’s current duties, responsibilities and years’ experience. Is their award classification still reflective of their position?
• Are junior rates applicable, and have relevant age-based pay increases been applied?
• Have your team members recently obtained any new qualifications, and, if so, does this impact their classifications and rates of pay?
• Are registered training agreements in place for Apprentices and Trainees? If they have progressed in their apprenticeship/traineeship, this may also result in an additional year-based wage increase.
• Are any of your workers on a supported wage system?

2. Familiarise yourself with the new rates of pay

• Most modern awards include Pay Rate and Allowance Summaries. This replaces the Pay Guides.
• Remember to check allowances at the end of the Pay Guides – such as meal allowances or first aid allowances. These may also have increased with inflation.
• If you are unsure, use the Fair Work Ombudsman’s pay and conditions tool (P.A.C.T.).
• You will need to refer back to the modern award in some cases to understand when certain rates, allowances, loadings and penalties may apply.

3. Stay up-to-date

To keep up-to-date with changes and receive tailored information, we suggest subscribing to the Fair Work Ombudsman’s email updates. You will be notified when the new minimum rates are available in the Pay Guides and when the online pay calculator has been updated. You can also receive updates of any changes relevant to your award (pay related or otherwise).

It would also be good practice to revisit this list each year, to remain informed and compliant.

4. Keep your workers up-to-date

It’s important to communicate the upcoming changes to your workers, including their new rates of pay and when they will take effect. If staff are advised verbally, follow this up in writing to avoid any misunderstandings.

Being aware of the rules around minimum wage is vital to running a compliant and sustainable business. By reviewing your workforce in line with award classifications, familiarising yourself with the pay rates, and staying up-to-date with changes, you will be well placed to build a compliant business.

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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.