16 June 2014 Award Wage Increase - What do I do?

By Warwick Ryan, Partner and Ellen Davis, Paralegal

In Brief

With the new tax year upon us, for many businesses, workers compensation policy periods turn-over and budgets are being finalised.  Amongst all this activity, the increase in award wages and the national minimum wage, can be missed, which can cause headaches for many businesses. This article highlights what businesses need to know.

Last week the Fair Work Commission handed down its determination in regard to its annual national minimum wage review.  The Commission awarded all national system employees (excluding state government employees) a 3% increase on top of the minimum wage, effective from the first pay period commencing 1 July 2014.

Currently the minimum wage for a full time employee aged 21 and over stands at $622.20 per week or $16.37 per hour. With the increase, the national minimum wage for a full time employee aged 21 and over will increase to $640.90 per week or $16.87 per hour.

The increase applies to minimum entitlements only.  This means the increase will directly affect employees who pay their staff in line with the national minimum wage (and not in excess of it).  It will also affect employees whose wage increases under collective/enterprise agreement where the annual increase is determined in line with the national minimum wage determination.

If you are already paying your staff in excess of the national minimum wage inclusive of the increase then you do not need to pass any further increase on to employees as it will already be absorbed into the above minimum wage payment.

Casual employees not covered by an award or agreement who rely on the national minimum wage will also now enjoy a casual loading of 25%.  The increase to the minimum casual loading brings it into line with that enjoyed by employees covered by modern awards.  As discussed above with regard to the minimum wage increase, most employers will already be paying in line or above the minimum casual loading and will therefore not have to pass on any further increase to their employees.

It is important to take the time when the minimum wage increase is determined each year to review your rates of pay whether provided for in enterprise/collective agreements, industry awards, individual flexibility agreements or contracts of employment to ensure that your business is protected against any future liability or penalties that may arise for the underpayment of wages.

Failure to review the minimum wage increases and if underpayments occur, the FWC is imposing harsh penalties on any non-compliant businesses. It is important that you comply with increases at the beginning of each tax year and implement them into your payment procedures.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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