On 19 June 2020, the Fair Work Commission announced their decision to increase the National Minimum Wage and Award wages by 1.75%.
This will see National Minimum Wage increase to $19.84 per hour / $753.80 per week.
Unlike previous years, the roll out will be staggered based on the economic impact Covid-19 has had on different industries. Accordingly, there are 3 awards groups with 3 separate effective dates as summarised in the table below.
The Fair work Commission announcement and the full Award list and corresponding increase effective dates can be found here.
WHAT DO I NEED TO DO?
If your employees are covered by national minimum wage or an award, familiarise yourself with the new rates and effective dates then ensure any necessary changes are passed on by the first full pay period starting on or after the effective date relevant to the Award/s.
Now is also a good time to check that each employee is correctly classified under the Award level applicable for the work they perform.
Any changes to employment details or entitlements should be confirmed in writing for each employee.
WHAT IF I PAY ABOVE AWARD?
If you currently pay above the award minimum rate, we recommend checking the new minimum pay rates and ensuring the current pay rate for each employee is still above the new minimum.
You are not required to increase your pay rates if they remain the same as or better than the new minimum rates.
ARE ALLOWANCES IMPACTED?
Some allowances will also be impacted by this change. Where an allowance is expressed as a percentage of the ‘standard’ rate (which is linked to the wage of a particular classification in the Award), these allowances will increase in line with the ‘standard rate’.
WHAT ABOUT ENTERPRISE AGREEMENTS?
Employers should undertake a review of their enterprise agreement rates to ensure they continue to be better than the equivalent Award minimum rates. Where they fall behind, EA rates should be increased to match the new Award minimum rates.
Employers who have committed to annual wage increases in their Enterprise Agreements should review the specific wording and determine what is both viable and lawful in the current economic conditions.
If you are currently planning or negotiating a new enterprise agreement, the new Award rates will be your reference point for BOOT (better off overall test) baseline testing.
FLAT RATES and IFA’s
If you pay any employees a flat rate or have an Individual Flexibility Arrangement in place, and they are covered by an Award, you are required to ensure the employee/s remain better off overall when compared to the new minimum rates and allowances. We recommend undertaking an assessment of each arrangement (BOOT) to ensure compliance.
The better off overall test referred to above also applies to annual salary arrangements. We recommend auditing work patterns, Award-specific salary requirements and new minimum rates to ensure compliance.
WHERE TO GET HELP
Wage compliance is a significant area of focus for the Fair Work Commission so it’s important you get it right. Unfortunately, it’s also complicated, tedious and time consuming so let us help you! Contact Edwards HR to understand how this decision may impact your business or to discuss how we can look after your wage assessment compliance needs.