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The Minimum Wage is Increasing

Published June 02, 2023 (last updated June 8, 2023) - Head of Operations

The Fair Work Commission livestreamed the Annual Wage Review earlier than expected, outlining the 2023 minimum wage rates on the 2nd of June.  

The decision will directly affect the pay packets of over 2.6 million Australians (approximately 1 in 4 workers), who receive either the minimum wage or an award wage. 

This is the earliest the Fair Work Commision has ever announced a minimum wage review. However, business owners still only have a month to prepare for the 1st of July 2023 when the changes become law.  

If you run an Australian business, it pays to understand the changes to the minimum wage. Beneath is a simple breakdown of the latest information and some practical steps you can take in response to the new minimum wage.  

What are the new minimum wage rates?  

The Fair Work Commission (FWC) recently announced a 5.75% a week increase to the National Minimum Wage (NMW). The changes become effective for the first full pay period on or after the 1st of July 2023.  

The National Minimum Wage applies to employees not covered by a modern award or registered agreement. The National Minimum Wage is a minimum pay rate as legislated by the Fair Work Act (2009), which is reviewed and updated each year. 

The minimum wage increases also affect other payments such as penalty rates, overtime, allowances and more. 

Will the minimum wage impact modern award wages? 

The Annual Wage Review also covers modern award minimum wages. Modern award minimum wages will increase by 5.75%, with the changes also coming into effect on the 1st of July 2023.

The Fair Work Commision will release more information concerning modern award minimum wages in due course. Employsure will publish all these details as soon as they are announced.

Confused by the new minimum wage?

If you’re wondering what your business needs to do about the new minimum wage, Employsure can help. We simplify workplace legislation so you can focus on what you do best – running a successful company. 

Call our FREE 24/7 Advice Line to have all your minimum wage questions answered.

How is the minimum wage decided? 

The minimum wage is set by the Fair Work Commission’s Expert Panel. Each year the panel reviews the current minimum wage and issues a revision. 

The panel is made up of seven people, including a President, three full-time members, and three part-time members. The members of the panel are chosen for their expertise in workplace relations, economics, commerce, and social policy. 

The Fair Work Act (2009) entitles individuals, businesses, and other organisations to submit formal requests to be considered before the panel sets a new minimum wage. The Act also demands that research conducted by the panel is published, ensuring transparency on how important minimum wage decisions are made. 

A minimum wage to offset inflation

The Australian Council of Trade Unions recently submitted a request to the panel asking for high inflation rates to be factored into the new minimum wage.  

To keep pace with soaring costs of living in Australia, the ACTU suggested a pay rise of 7% for the nation’s lowest-paid workers.

Prime Minister Anthony Albanese said the Federal Government’s submission to the panel was “absolutely consistent with our values”, raising expectations that the Government has also called for a minimum wage mirroring inflation.  

What the minimum wage increase means for small businesses   

Offering a different perspective, The Council of Small Business Organisations Australia has called for a more modest increase in the minimum wage.  

With SMEs struggling to absorb increasing costs and remain profitable, COSBOA suggests that an increase of 4% will enable employees to cover the cost of living without placing excessive financial burdens on businesses with fewer resources.    

COSBOA note that in addition to raising minimum wages, SMEs must also cover larger superannuation contributions, which are already set to increase by 0.5% to 11% on the 1st of July 2023.  

Many SME owners have voiced a concern that a minimum wage increase in line with inflation could ultimately lead to a recession, noting that award-reliant industries like hospitality and retail have already endured falling profits over the past few years.

The official 5.75% minimum wage increase seems to represent a healthy a compromise, striking a balance between the ACTU and COSBOA’s demands.

What should your business do? 

Remember – an honest day’s work should always be paid fairly. If you’re unsure about the implications of the new minimum wage for your business, Employsure can give you the practical advice needed to successfully navigate the changes:   

  • Call our FREE 24/7 Advice Line for questions or information 
  • Check our website for the latest updates 

Call us on 1300 207 182 today for more information about how Employsure can help your business meet its obligations with the minimum wage increase. 

Minimum Wage Increase Factsheet

How does the latest minimum wage increase impact you? Download our factsheet to learn more. 

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Frequently Asked Questions

  • Do I need to increase my employee’s rate of pay if they are already getting paid higher than the minimum?

    No. If your employee is already paid higher than the minimum you will not need to increase their rate again. However, it is strongly recommended that you review the rates to ensure they are high enough to meet the new minimum wage obligations and adjust them if they are not. If your employee is on a loaded rate, you might need to adjust the amount of overtime, allowances, penalties and loadings included in their rate of pay to ensure there is no risk of underpayment.

  • Does the National Minimum Wage increase affect all employees, or just those covered by awards?

    Yes. The National Minimum Wage increase impacts all national system employees including those that are not covered by an Award. If you would like to understand the different increase amounts for award covered and award free employees, please contact us for free initial advice on 1300 207 182.

  • How much is the minimum wage for part-time and casual employees?

    Part-time employees have the same minimum entitlements as full-time employees, but on a pro-rata basis according to the hours they work. This means that a part-time employee is entitled to the same minimum rate of pay per hour as a full-time employee for the job that they do but will generally be paid less overall because they work less than full-time hours. Casual workers in Australia are entitled to an additional payment made on top of a casual employee’s fixed hourly wage.

  • Does the minimum wage apply to junior employees?

    This will depend on the award or agreement the business falls under. Awards and agreements may stipulate a percentage of the adult wage for anyone who is defined as a junior employee.

  • Does the minimum wage increase apply to all businesses?

    The minimum wage increases impacts businesses and employees that are national system employers and employees. These are businesses that are covered by the Fair Work Act 2009 (the Act). The Act covers most private businesses in Australia, but some private businesses are not covered by the Act.

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