2021 Minimum Wage Increase

After the challenge of COVID-19 and subsequent lockdowns, business owners have to climb a new hurdle from 1 July 2021. The Fair Work Commission has decided to increase the national minimum wage by 2.5% to $20.33 per hour, a $0.49 hourly rate rise. In other words, the minimum a full-time employee will receive is $772.60 per week, an increase of $18.80.

The rise in wages will again be staggered over several months for certain industries. While most will see the increase take effect in July, general retail will be delayed until the first full pay period on or after September 1. Workers covered by more than 20 awards, including tourism, hospitality, restaurant, fitness, hair and beauty, and aviation won’t see an increase until after November 1.

The staggered approach to increasing the minimum wage across certain industries may cause confusion for employers. With international borders still closed for the foreseeable future, and snap lockdowns still clearly well on the cards, employers must use this time to try and preserve as much cash as they can, until the COVID-19 vaccine fully rolls out and overseas travellers can enter.

Annual Wage Review

Since 2010, the Fair Work Commission (FWC) has raised the minimum wage every year. Until last year, the national minimum wage and all Awards received the increase from the first full pay period on or after 1 July. The FWC does their research and encourages input from industry, businesses and individuals who will be affected by any changes.

Given that 2020 was not a typical year, for the first time Award increases were staggered at three intervals: 1 July 2020; 1 November 2020; and 1 February 2021.

The wage rates affect all employees under the national workplaces relations system. To better understand if your business falls under the national workplace relations system or not, please visit this blog.

What is the Minimum Wage?

The Minimum Wage is the lowest amount you can pay an Employee who works for a business that falls under the National Workplace Relations System, this means employees to whom an Award applies that was introduced under the Fair Work Act 2009. 

Permanent full-time and part-time award free adult employees must be paid at least the minimum wage rate as their base rate of pay per hour worked, currently $19.84 per hour, or $753.80 per week (before tax) based on a 38-hour working week.

 The base rate of pay does not include any of the following:

• incentive‑based payments or bonuses;

• loadings;

• allowances;

• overtime; or

• penalty rates

Casual employees are paid the minimum wage rate plus a ‘casual loading’ of at least 25% of the minimum wage.

See below FAQ how the awards are staggered

What if I have an Enterprise Agreement?

Workers employed through enterprise agreements or individual agreements made with their employer are also subject to the minimum wage, or the minimum award rate where an award would otherwise apply, and any pay calculations in the agreement must be reflect at least the same pay increase as the minimum wage increase.

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