Minimum Wage Increases

EVERY YEAR, AN EXPERT PANEL OF THE FAIR WORK COMMISSION REVIEWS MODERN AWARD MINIMUM WAGES AND SETS A NATIONAL MINIMUM WAGE ORDER FOR EMPLOYEES NOT COVERED BY ENTERPRISE AGREEMENTS OR MODERN AWARDS.

This year, the Fair Work Commission’s minimum wage panel has increased the Federal Minimum Wage by a modest 1.75%, in recognition of the economic effects of the COVID-19 pandemic, lower than the latest consumer price inflation figure of 2.2% and the previous year’s increase of 3%.

What is the increase?

For anyone not covered by a Modern Award or Enterprise Agreement, the new National Minimum Wage (NMW) will be $753.80 per week – or $19.84 an hour. This equates to an increase of around $13 per week. All Modern Award rates of pay will also increase by 1.75% however, the Commission has set different start dates between July this year and February next year.

The Fair Work Commission president and minimum wage panel head, Justice Iain Ross, said three operative dates have been chosen, based on the impacts of the pandemic on each sector.

When does the increase apply?

This is the first time the increases to the Modern Award wages will not be applied at the same time. In considering the impact of COVID-19, the panel felt that there were exceptional circumstances that justified the deferment of the wage increases for certain industries.

Workers covered by ‘Group 1’ awards, such as frontline healthcare and social assistance workers, teachers and  childcare workers and other essential services, received their increase from 1 July 2020.

The Electrical, Electronic and Communications Contracting Award 2010 and Clerks (Private Sector) Award 2020 fall under “Group 2” awards. Workers covered by ‘Group 2’ awards, in construction, manufacturing, and other industries, will receive the increase from 1 November 2020.

Those in ‘Group 3’, in accommodation/ food services, arts/recreation, aviation, retail and tourism, will receive the increase on 1 February 2021.

What about the allowances?

All the allowances will increase at the same time the wage rates increase – on 1 November 2020.

Some allowances in the Awards are calculated based on the standard rate stipulated in the Awards. As such, they will increase in accordance with the new wage rates.

Other expense-related allowances, such as meal allowance and first aid allowance, will increase by the relevant Consumer Price Index (CPI) figure.

What should you do?

If your employees are covered by one of the Awards listed above, and you pay your employees Award minimum wages,

you must increase these wages by 1.75% on 1 November 2020.

If your employees are covered by an Enterprise Agreement or individual employment contracts, and they are receiving slightly above Award minimum wages, you should review your wage and allowance rates to ensure that you are still paying at or above the minimum rate of pay as of 1 November 2020.

If you pay well above the Award rates, then the increase will not affect you.

NECA will release an updated wage bulletin for the Electrical, Electronic and Communications Contracting Award 2010 prior to 1 November 2020.