Each year the Minimum Wage Panel of Fair Work Australia (FWA) undertakes a review of the minimum rates of pay in modern awards and the federal minimum wage.
Any resulting increase to those rates of pay then comes into operation on the first pay period on or after 1 July of that year.
Who will this affect?
From the first pay period on or after 1 July 2012, you must ensure that:
- all employees receive at least the new national minimum wage; and
- employees covered by modern awards receive at least the new updated minimum award rates.
Even where the employer is a party to a registered workplace agreement made under federal laws (eg. enterprise agreement, or an old AWA or ITEA) it must ensure that the base rates of pay provided under that agreement are at least equivalent to the new minimum rates of pay.
Expense related allowances in modern awards (meals, uniforms, etc.) are likely to be adjusted to take effect at the same time as any adjustment to the national minimum wage.
Where is the process up to?
No decision has been made by FWA as yet. However, submissions have closed in this year’s review.
The main parties are advocating increases of between $9.40 and $26 per week to minimum award rates.
What do I need to do in preparation?
- Check what instrument your employees are covered by. Many employers do not realise their employees are covered by a modern award.
- Undertake some preliminary work to establish which employees are likely to be impacted by an increase to minimum wages.
- Keep up to date so that you know the outcome when FWA makes its decision.
- Ensure your payroll systems are prepared to process a potential pay increases from the first pay period on or after 1 July 2012.
Look out for our update following the handing down of the decision. We expect an announcement in May or June.
What are the consequences of getting it wrong?
The consequences of getting it wrong are significant: penalties of up to $6,600 for an individual and $33,000 for a corporation, as well as compensation to employees for any underpayments.
For more information, please contact a member of our Employment and Workplace Relations team on (03) 8600 8888.
Note: This update is a guide only and is not intended to constitute legal advice.