The Fair Work Commission (FWC) made two announcements after the 2022 Annual Wage Review. First, the National Minimum Wage will rise by 5.2 per cent to $40 per week. Secondly, award minimum wages will rise by 4.6 per cent, with a minimum increase of $40 per week.
Changes to the minimum wage in 2022
The Fair Work Commission declared that the national minimum wage will increase by 5.2 per cent beginning July 1, 2022. This is higher than the current inflation rate of 5.1 per cent and follows freshly elected Prime Minister Anthony Albanese’s election vow to increase the minimum wage in accordance with inflation.
The Fair Work Commission said that its ruling will impact over 2.7 million workers, as well as additional employees covered by business agreements and other compensation arrangements.
The minimum wage for the financial year 2021/2022 sits at $20.33 per hour, equating to $772.60 per week for full-time workers. The hike’s implementation will result in a $1.05 increase to $21.38 per hour and an increase to $812.44 per week for minimum wage employees.
For individuals earning more than $869.60 per week, the modern award minimum wage will increase by 4.6 per cent to reflect the rising cost of living. Anyone earning less than that will get a $40 per week raise.
Minimum wage rates in Australia since 2007
|Commencement Date||Per hour||Per 38-hour week|
|October 1 2007||$13.74||$522.12|
|October 1 2008||$14.31||$543.78|
|July 1 2009||Unchanged||Unchanged|
|July 1 2010||$15.00||$569.90|
|July 1 2011||$15.51||$589.30|
|July 1 2012||$15.96||$606.40|
|July 1 2013||$16.37||$622.20|
|July 1 2014||$16.87||$640.90|
|July 1 2015||$17.29||$656.90|
|July 1 2016||$17.70||$672.70|
|July 1 2017||$18.29||$694.90|
|July 1 2018||$18.93||$719.20|
|July 1 2019||$19.49||$740.80|
|July 1 2020||$19.84||$753.80|
|July 1 2021.||$20.33||$772.60|
|July 1 2022.||$21.38||$812.44|
Why was there a higher than usual increase?
A hike in the minimum wage beyond the level proposed by the employer associations was deemed necessary because of the substantial rise in living expenses and inflation, which is expected to reach roughly 6%. This would have a particularly significant effect on lower-paid workers.
On the other hand, expert panel members recognised the need to balance this effect against the potential inflationary pressures that may arise from any increase.
The alterations to modern awards will go into effect on July 1, 2022, except for some modern awards in the aviation, tourism, and hospitality sector, which will have their operative date pushed back to October 1, 2022.
Who sets the minimum wage?
The Fair Work Commission’s Expert Panel has established the minimum wage since 2010. Every year, it evaluates the existing minimum wage and makes a decision that takes effect on July 1 of the next financial year.
The Expert Panel comprises seven people: a President, three additional full-time members, and three part-time members. They are specialists in labour relations, economics, social policy, and business.
Although the Fair Work Commission determines the minimum wage and is governed by the Fair Work Act of 2009, there is no sign that this structure will alter in the near or medium term. It’s worth noting, though, that if federal law is changed or replaced, the way the minimum wage is calculated and enforced may also change.
What you should do as an employer
Employers should now carefully assess their pay arrangements and execute the appropriate salary increases to ensure that minimum wage rates are at least consistent with the underlying contemporary award.
Employers that make above-award compensation should assess such arrangements to verify that they are sufficient to cover the increases (provided they are also supported by the necessary individual flexibility or other agreements).
Due to the delayed implementation of minimum wage hikes in the 2021-22 financial year, some companies may face a second modern award rate rise in the past 12 months.
If you have any queries regarding the above information, please do not hesitate to contact an Accru specialist today.