Awards Increase by 2.4% – Are You Paying The New Legal Rates?

Despite sluggish wage growth, combined with low inflation, the Fair Work Commission’s Minimum Wage Panel (“FWC MWP”) recently increased and the Federal Minimum Wage by 2.4%. This ‘pulls through’ to all Modern Award minimum wage rates and means the legal minimum for your employees have increased accordingly. Are you still compliant?

After 1 July 2016, the national minimum wage will increase to $672.60 per week ($17.70 per hour). In comparison, annual CPI is currently running at 1.3%. The FWC MWP justified the increase stating they hoped the “modest” increase would promote greater social inclusion, assist low paid employees and increase workforce participation. We’ll see.

These hopes are to be balanced against the risk further wage increases results in many low paid workers losing their jobs or becoming unaffordable (or the high number of unemployed looking for work will be deemed ‘too expensive’ to hire on these rates) for an ever-expanding pool of employers.

The ways this increase affects your organisation includes:

• Modern Awards:If your employees are employed on Modern Award pay rates they will need to be increased to remain legally compliant. Consider our ‘Modern Award Compliance Audit’ for your business, to give you the specific ‘dollar value’ to be paid to employees on various classifications and under different awards.
• Award allowances:The FWC MWP increases all award allowances as well as base pay rates. For example, allowances expressed as a percentage of the “standard rate”, which is linked to the wage rate of a specific classification in the award, appear in many modern awards and will increase in line with the increase in the ‘standard’ pay rate.
• Annualised Salaries and ‘All-In’ Rates:If you have ‘all inclusive’ pay rates, you may need to reassess those agreements to ensure employees remain “better off overall” when compared to the newly increased modern award pay rates. Similarly, you might want to check any annualised salary arrangements you have to ensure there is still enough ‘fat’ or ‘buffer’ between the annualised salary and the grossed-up modern award pay and benefit minima.
• EBA Pay Rates:You will need to ensure the minimum base pay rates in your EBA (particularly ones with a commencement date of greater than 5 years ago) remain at least equal to the new award pay rates. If, over time, they have fallen below the corresponding modern award pay minimum, you should increase the EBA’s base rates to align with these newly-increased award rates.

Workplace Wizards provides specialist workplace relations support to Australian companies. Contact us today to have us assist you comply with the pay, allowances and other requirements of your modern award/s, help negotiate your upcoming EBA or resolve any other HR, employee, trade union or workers’ compensation issue holding your organisation back.