Urgent update: Fair Work Australia announces $26 minimum wage increase

Fair Work Australia (FWA) has, this morning, announced a $26 weekly increase in minimum wages. This weekly increase amounts to a 69¢ per hour  increase to modern award rates of pay.

In making its decision, FWA indicated that, since March 2008 when the last wage review was undertaken, the Australian economy has performed much better than expected. During that time, productivity, prices and real earnings have grown in the absence of any increase to minimum wages.

FWA accordingly found that there was a case for a rise to minimum wages to provide a safety net for low paid workers, to protect the relative living standards of award-reliant employees and to assist the low paid to meet their day-to-day needs. It was the view of FWA that financial forecasts for 2010-11 give strong grounds to conclude that an increase could be awarded without threatening business viability, employment growth or adding to inflation.

This increase to minimum wages will take effect from the first full pay period that starts on or after Thursday 1 July 2010.

Impact of Increase on Transitional Rates of Pay

As noted in the recent Mason Sier Turnbull Weekly News article, minimum rates of pay start to transition from existing federal awards and NAPSAs to the modern awards from 1 July 2010. The effect of the transitional provisions is that today’s minimum wage increase will not simply be added to existing minimum award rates.

The general principle is that for each year up to July 2014, minimum rate of pay will adjust by 20% of the difference between the pre-1 July 2010 entitlement and the modern award entitlement as adjusted, whether upwards or downwards, provided there is no actual reduction in an employee’s take home pay. In undertaking this calculation, any FWA minimum wage increases are applied to the modern award rate of pay.

The new minimum rate of pay will accordingly be the new transitional rate of pay, taking into account existing award rates of pay and the new modern award rates of pay.

Businesses Covered by a Registered Workplace Agreement

Businesses that are party to a registered workplace agreement (e.g. certified agreement, collective agreement, enterprise agreement, AWA or ITEA) must ensure that the base rates of pay provided under that agreement meet or exceed new minimum rates of pay.

Award Covered Employers

Businesses that are not party to a registered workplace agreement will be covered by award rates of pay. The increase to minimum rates of pay will also flow through to penalty rates and overtime loadings payable under the applicable award.

Confused? Need Help?

Mason Sier Turnbull offers an Annual Updater Service to assist employers that are uncertain how to calculate the new minimum wage rates which apply to their workforce for the period 1 July 2010 to June 30 2011.

Subscribers to the Annual Updater Service, will be provided with a schedule of the new minimum wage rates for each job classification covered by your registered agreement or award. This will ensure that you are knowingly over or underpaying any of your employees.

For employers subject to a registered workplace agreement

The Annual Updater Service operates as a fixed fee service determined by the number of job classifications covered by your agreement as follows:

No. of job classifications	Fixed Fee
Up to 5	$550.00 (inc GST)
6 to 10	$825.00 (inc GST)
11 or more	$990.00 (inc. GST)

For employers not subject to a registered workplace agreement

The Annual Updater Service will also provide information on new penalty rate obligations as they are affected by transitional provisions. This will also be provided under a fixed fee service determined by the number of awards (incl. any existing federal awards of NAPSAs that affect transitional arrangements) and job classifications operating in your business as follows:

Number of Job Classifications	1 to 5 Applicable Awards	6 or more Applicable Awards
Up to 5	$650 (inc. GST)	$875 (inc. GST)
6 to 10	$765 (inc. GST)	$990 (inc. GST)
11 or more	$875 (inc. GST)	$1,100 (inc. GST)

To subscribe to the Annual Updater Service, please complete the registration form, bearing in mind that the modern award rates will change on 1 July 2010.

If you have any questions in relation to Mason Sier Turnbull’s Annual Updater Service, please contact Heather Staines on (03) 8540 0296.

For any questions regarding the wage increase or any other Workplace Relations matters please contact one of our Workplace Relations lawyers.

Author: Katie Sweatman