Annual Wage Review Decision 2017 and Penalty Rates Transitional Arrangements
The Fair Work Commission (FWC) has announced the outcome of the Annual Wage Review (AWR) and in a separate decision, the Full Bench of the FWC has set out the arrangements for the reduction in Sunday and Public Holiday penalty rates.
Annual Wage Review Decision 2017
In accordance with the provisions of the Fair Work Act 2009 (Cth) (FW Act) the Fair Work Commission (FWC)’s Expert Panel is required to conduct and complete a review of the national minimum wage (NMW) and minimum wages in Modern Awards each financial year as part of the AWR.
The NMW is the safety net of minimum wages in Australia. It is estimated that over 2.3 million employees in Australia are reliant on the minimum rate of pay.
On 7 June 2017 the Expert Panel announced the outcome of the AWR. Below is a summary of the outcome.
National Minimum Wage Increase
The NMW applies to employees who are not covered by a Modern Award or Enterprise Agreement.
From the first full pay period on or after 1 July 2017, the NMW will increase by 3.3%, with commensurate increases in hourly rates on the basis of a 38 hour week.
Accordingly, from the first full pay period on or after 1 July 2017, the NMW will be $694.90per week or$18.29 per hour.
Minimum Wages in Modern Awards
The FWC also determined that it was appropriate to increase the minimum wages in Modern Awards.
From the first full pay period on or after 1 July 2017, the minimum wages in Modern Awards will also increase by 3.3%, with weekly wages to be rounded to the nearest 10 cents.
The increase will also apply to junior employees, apprentices and trainees and Award-covered piece work employees.
Special National Minimum Wages
Consistent with previous AWR decisions, the Expert Panel confirmed that for Award/Agreement-free junior employees, the junior wage percentage scale in the Miscellaneous Award 2010 would be used.
From the first full pay period on or after 1 July 2017, all Award/Agreement-free juniors must receive at least the following from weekly rate of pay:
Employers should now take the time to review the wage increases in accordance with their applicable industrial instruments and contracts of employment.
To ensure that employees are being adequately compensated employers should also conduct regular reviews of an employee’s wage and the obligations in the applicable industrial instrument or contract.
For employers who have employees employed under Enterprise Agreements, there is an obligation to ensure that employees are at least receiving the base rate of pay as prescribed by the applicable classification in the Modern Award – regardless of the rate in the Enterprise Agreement itself.
To ensure compliance, all employers with Enterprise Agreements should now compare the new increased rate in the applicable Modern Award against the Enterprise Agreement rates.
Penalty Rates Transitional Arrangements
On 23 February 2017 the Full Bench of the FWC handed down the Penalty Rates Decision, making changes to weekend, public holiday and early/late night penalties in particular Modern Awards in the hospitality and retail sectors. In this decision, the Full Bench determined that transitional arrangements would be made to implement the reduction in penalty rates.
The Full Bench has recently handed down the Penalty Rates – Transitional Arrangements Decision (the Decision), regarding the implementation of the reduction in Sunday and public holiday penalty rates.
The following is the proposed transitional arrangements for the changes to the Sunday penalty rates:
The Full Bench determined that it was appropriate for the adjustments to take place on 1 July each year to correspond with any increases which may arise from AWR decisions.
In relation to public holiday penalty rates, the Full Bench noted in particular that public holidays were different in Australian State and Territories (with most occurring in the first half of the year) and that the impact from the reduction will be less than the reduction in Sunday penalty rates.
The Full Bench determined that the reduction in public holiday penalty rates should be implemented from 1 July 2017 without any need for transitional arrangements. Accordingly, from 1 July 2017, the following public holiday penalty rates will be applicable:
As we reported in our March 2017 Employment Law E-update, the variation to the hours of when the early/late night work penalty is applicable under the Fast Food Industry Award 2010 and the Restaurant Industry Award 2010 will also to take effect from 1 July 2017.
Where to from here?
There are a number of adjustments that employers will need to consider and implement ready for the commencement of the new financial year.
Employers should take this opportunity to review employee wages and ensure that minimum entitlements are passed on.
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