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Time to start budgeting for the 1 July 2022 wage and superannuation increases

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By Chao Ni, Principal, MST Lawyers

With the topic of minimum wages front and centre of the Federal Election campaign, businesses should start budgeting for the upcoming 1 July changes to:

  • The national minimum wage (NMW); and
  • The minimum superannuation guarantee rate.

The NMW and Modern Award Minimum Wage Rates

The Fair Work Commission makes a National Wage Decision in June of each year for the subsequent financial year.

The increase to the NMW will also flow onto modern award minimum rates of pay, which in turn, will have a ripple effect on other types of modern award entitlements such as:

  • Junior, apprentice and trainee rates
  • Casual rates
  • Penalty rates
  • Overtime rates
  • Allowances that are underpinned by a ‘standard rate’
  • Annual leave loading

Registered agreement holders

An increase to award minimum rates also affects businesses that are covered by registered agreements (e.g. a certified agreement, collective agreement or enterprise agreement) because the Fair Work Act 2009 makes it unlawful for any business to pay less than award base rates of pay for those employees who are covered by an award.

Any business that is operating under a registered agreement should review their minimum wage rate obligations following the National Wage Decision of the Fair Work Commission.

How much will the NMW increase by?

Despite Anthony Albanese endorsing a 5.1% increase to the NMW, data from the last decade shows that no single increase has been higher than 3.5%.

We predict that the next NMW increase will be around 2.5% to 3.0%.  This result would recognise previous increase decisions, the economic recovery from the pandemic, the impending changes to the superannuation guarantee and the recent rise to the cost of living.

Increase to the Minimum Superannuation Guarantee Rate

From 1 July 2022:

  1. The minimum superannuation guarantee rate will increase from 10.0% to 10.5%.
  1. The $450 minimum monthly income threshold for entitlement to superannuation will be removed.

Employees under 18 years of age will still need to work more than 30 hours per week to be entitled to the minimum superannuation guarantee.

Other cost implications

An increase to payroll expense for businesses could have other flow-on effects in terms of payroll tax and business insurance premiums (e.g. Workcover insurance).

To find out more about your specific employer obligations for the next financial year, please contact the MST Lawyers’ Employment Law team by email on workplace@mst.com.au or by phone on +61 3 8540 0200.