Annual wage review – Increase to minimum rates of pay

Please note that the information provided below is relevant as of June 2015. For updated news on the Minimum Wage please visit our latest guide here.

The Fair Work Commission today delivered its annual wage review. This decision will have a significant impact on all businesses and industries and over 1.86 million employees who are paid at the national minimum wage or minimum modern award rates.

With effect from the first full pay period commencing after 1 July 2015:

– all modern award rates will increase by 2.5 per cent (with weekly wages rounded to the nearest $0.10); and
– the national minimum wage will increase by 2.5 per cent to $17.29 per hour (and $656.90 per week for a full-time employee), an increase of $0.42 per hour.

As a reminder, the superannuation guarantee rate will remain at 9.5 per cent.

Although the Commission’s decision confirms the basic increase in minimum rates, the Commission has not yet released confirmation of the specific rates (including rounding and allowances) for each award. These will be released before 1 July 2015.

In reaching its decision to award a lower increase than last year, the Commission took into consideration the reduction in inflation and aggregate wages growth, noting that CPI had increased by only 1.3 per cent and aggregate wages growth was at its lowest for the past decade. These economic conditions ‘favoured a more modest increase in minimum wages’.

The Commission also noted that unemployment had grown to 6.1 per cent in April 2015 and the uncertainty around economic growth from non-mining investment provided a ‘reason for some caution’. The relative living standards of those reliant on minimum wages had also improved in recent years, but there was also no evidence of ‘corporate stress’ and real unit labour costs were at historically low levels.

Although a number of industry bodies had argued that modern award rates should be reviewed on an industry by industry basis, the Commission did not find any exceptional circumstances to justify an award by award based approach.

What do I need to do?

If you pay your staff at award level, the increase to minimum rates take effect from the first full pay period commencing after 1 July 2015.

If you already pay above award rates, you may not be required to increase your employees’ wages, provided the rates you pay are above the increased minimum award rates (and you are not required to increase employees’ wages under their contracts of employment or applicable enterprise agreement).

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