Annual Wage Review decision made.
The Fair Work Commission handed down its Annual Wage Review decision late last week and from 1 July, the national minimum wage will be increased by 1.75%. The new minimum hourly wage will be $19.84 (or $753.80 per week). This equates to an increase of 35 cents per hour or $13.00 per week.
This rise is significantly lower than other years and below the current consumer price inflation figure of 2.2%.
The increase awarded in 2019 was 3%. This year, the Australian Council of Trade Unions were asking for a 4% increase. Conversely employers were pushing for a wage freeze due to COVID and the fact that many businesses are struggling financially.
In handing down the decision the Expert Panel of the Fair Work Commission acknowledged the significant impact of the COVID-19 pandemic and said they had to balance the perspectives of both employees and employers. In determining the rate they said they had also taken into account the recently introduced Jobkeeper and Jobseeker schemes which benefit low income households.
Modern award rates will also be increased by 1.75% but unlike previous years when all increase are effective from 1 July, increases for different awards are being staggered across different months!
The Fair Work Commission acknowledged that while the pandemic has been felt across the entire Australian economy, that some sectors have been more adversely affected than others. This led to their decision to stagger the increases so the industries hit hardest by Covid-19 would not have to apply the increases until February 2020.
Those industries less affected by the pandemic including healthcare, education, childcare and other essential workers will receive the 1.75% increase from 1st July 2020.
The second round of increases will come into effect in November 2020 and will include industries such as construction, manufacturing and a range of other industries.
For those working in industries most adversely affected by the pandemic the increases have been delayed and will not come into effect until February 2021. Industries in this category include accommodation and food services, arts and recreational services, retail and tourism.
What do employers need to do?
Employers must ensure that they are continuing to pay employees at the correct rate and implement the necessary wage increases at the appropriate time.
Even if employers are paying above award payments, they should check wage arrangements to ensure they are high enough to cover the minimum wage increase.