Award Wage Increase — What do I do?

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.