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Employment and Workplace Relations update: Minimum wage and allowances to increase from 1 July 2012

Jun 4, 2012

On 1 June 2012, Fair Work Australia (FWA) announced an increase to minimum wages.

The FWA Minimum Wage Review decision:

  • increased the national minimum wage to $606.40 per week or $15.96 per hour;
  • increased by 2.9% per week minimum weekly wages contained in modern awards and in some transitional instruments; and
  • increased the casual loading for award/agreement free employees to 23%.

Expense related allowances in modern awards (meals, uniforms, etc.) will also be adjusted in accordance with the relevant provisions of modern awards.

When do the changes apply?

The new minimum entitlements take effect from the first full pay period on or after 1 July 2012.

Who do the increases apply to?

The increases are to the minimum entitlements only.

So, if you are paying a base rate that is in excess of the modern award wage for a particular classification, then your employees do not receive a pay increase as a result of the decision. However, even award-free employees must receive at least the national minimum wage.

The process of working out what minimum provisions apply to your employees is complex and depends on matters such as:

  • what relevant modern award applies to them, if any; and
  • whether any relevant award rates are subject to a transitional or ‘phasing in’ period whereby wages and penalties in the modern awards come into force over 5 years, starting from 1 July 2010.

Even where the employer is a party to a registered workplace agreement made under federal laws (e.g. enterprise agreement, 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.

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.

Make sure you get advice to ensure that you’re not exposed to underpayment claims or penalties.

More information

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. BACK