National minimum wage increase (award/agreement-free employees), Minimum wages in modern awards, What does the annual wage review decision mean for employers?
Each financial year, 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 as part of the Annual Wage Review (AWR).
On 1 June 2018 the Expert Panel announced the outcome of the AWR and below is a summary of the outcome.
National minimum wage increase (award/agreement-free employees)
From the first full pay period on or after 1 July 2018, the NMW will increase by 3.5% (an increase of $24.30 per week).
Accordingly, from the first full pay period on or after 1 July 2018, the NMW will be $719.20 per week or $18.93 per hour.
Consistent with previous AWR decisions, the Expert Panel confirmed that for the special NMW for award/agreement-free junior employees, the junior wage percentage scale in the Miscellaneous Award 2010 (Miscellaneous Award) would be used.
Similarly, for award/agreement-free apprentices and trainees and employees to whom a training arrangement applies, the Expert Panel decided that the special NMW will be set as per the Miscellaneous Award.
For employees with a disability, the Expert Panel held that there should be two special NMWs. For employees with disability whose productivity is not affected, wages will be as per an assessment under the supported wage system.
The Expert Panel confirmed that the casual loading of 25% will continue to apply for award/agreement-free employees.
Minimum wages in modern awards
The Expert Panel also determined to increase the minimum wages in modern awards.
From the first full pay period on or after 1 July 2018, the minimum wages in modern awards will increase by 3.5%, 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.
What does the annual wage review decision mean for employers?
Employers are required to ensure that employees are at least being paid the minimum wages or rates of pay set by the AWR decision come the first full pay period after 1 July 2018.
Under the FW Act, employers must not contravene a term of the NMW Order or penalties could apply.
Employers should now take the time to review how the wage increases handed down by the Expert Panel will impact the rates paid to employees under the industrial instruments and contracts of employment applicable in their workplace, and prepare for the changes to come into effect from 1 July 2018.
Employers who engage employees under enterprise agreements must ensure that those employees are at least receiving the base rate of pay prescribed by the applicable classification in the relevant 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.
Employers should also conduct regular reviews of their employees’ wages and any obligations in an applicable industrial instrument or contract to ensure that employees are being adequately compensated.
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