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Minimum wage increase

Minimum WageJune 1, 2016

Minimum wage increase (Last Updated On: August 9, 2016)

On Tuesday 31 May the Fair Work Commission (FWC) 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 2016:

  • all modern award rates will increase by 2.4% (with weekly wages rounded to the nearest $0.10)
  • the national minimum wage will increase by 2.4% to $17.70 per hour (and $672.70 per week for a full-time employee), an increase of $0.41 per hour

This decision does not affect the superannuation guarantee rate which will remain at 9.5%.

In reaching its decision, the Commission took into account the fact that there had been ‘robust economic growth in Australia’ (with 3% GDP increase to December 2015) and there had been a drop in unemployment from 6.1% to 5.8% since April 2015. These economic conditions favoured a more modest increase in minimum wages.

How does this affect me?

If you pay your staff at the current award rate, you must increase pay to the minimum rates but only from the first full pay period after 1 July 2016.

If you already pay above award rates, you may not be required to increase your employees’ wages, provided the rates you currently pay are above the increased minimum award rates. Please also review if there are any clauses in your employees’ contracts stipulating a change in rates.

If your staff are covered by an enterprise agreement, you must still ensure that the base rates payable under that enterprise agreement are above the increased minimum award rates (as otherwise the award rates will apply). Often enterprise agreements will also stipulate a change of rates in line with any increase to minimum award rates, so it is important to check your agreement carefully.

What do I need to do now?

Although the Commission’s decision confirms the basic increase in minimum rates, confirmation of the specific rates (including new allowance rates) for each award have not yet been released. These will be released before 1 July 2016.

Therefore, you do not need to take any action now.

We will provide more specific information and wages schedules for your industry in the coming weeks, once final determinations are released.  As always, we will be on hand to help you with any questions.

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