Fair Work Commission Increases Minimum Wage by 5.2%

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Fair Work Commission Increases Minimum Wage by 5.2%

The Fair Work Commission has announced a 5.2% increase to the national minimum wage and a 4.6% rise to award minimum wages, subject to a minimum increase for adult award classifications of $40 per week.

This two-tiered approach is a departure from a fixed percentage across the board, with the aim to protect the real value of wages of the lowest paid workers.

The Commission’s President, Justice Iain Ross, said the most significant changes since last year’s Review decision have been the sharp rise in the cost of living, including the outlook for inflation, and the strengthening of the labour market.

Considering the economic conditions, the erosion of the real value of wages and the reduction in living standards, President Ross stated “The Panel concluded that the changes in the economic context weigh in favour of an increase in the national minimum wage and modern award minimum wages.”

The wage review has considered the need for moderation due to the 0.5% increase in the Superannuation Guarantee rate due 1 July 2022, the removal of the $450.00 per month superannuation threshold and current Budget measures. However, the Commission is conscious of the low paid, around 2.7 million Australian workers, being vulnerable to rising inflation and the increased cost of non-discretionary items such as food staples.

What is the Minimum Wage?

All employees working in Australia are entitled to the minimum wage – it is illegal to pay less.

The minimum wage refers to gross pay (pre-tax) and the hourly rate is calculated based on a 38-hour week.

What is the new Minimum Wage increase?

The minimum wage will increase by $40.00 per week to $812.60 per week.

This equates to $21.38 per hour – an increase of $1.05 per hour.

What is the Modern Award Minimum Wage increase?

The minimum wage rates in modern awards will increase by 4.6% for all wage rates above $869.60 per week.

Wage rates below $869.60 per week will be adjusted by $40 per week – an increase of $1.05 per hour.

For example:

A retail employee – level 1 has a current weekly pay rate of $848.50. As the weekly rate is below $869.60, it will be increased by $40.00 per week to $888.50 per week. This equates to a new hourly rate of $23.38, an increase of $1.05.

A retail employee – level 5 has a current weekly pay of $936.50. As this rate is above $869.90, the 4.6% increase will apply. The new weekly rate is $979.58 or $25.77 per hour.

When do the increases take effect?

For the majority of Awards, the increases will take effect on the first full pay period on or after 1 July 2022.

However, due to exceptional circumstances, the following awards will not increase until 1 October 2022:

  • Aircraft Cabin Crew Award 2020
  • Airline Operations – Ground Staff Award 2020
  • Air Pilots Award 2020
  • Airport Employees Award 2020
  • Airservices Australia Enterprise Award 2016
  • Alpine Resorts Award 2020
  • Hospitality Industry (General) Award 2020
  • Marine Tourism and Charter Vessels Award 2020
  • Registered and Licensed Clubs Award 2020
  • Restaurant Industry Award 2020.

To consider:

  • Apart from the listed exceptions, all awards will increase on 1 July 2022 along with the national minimum wage.
  • Employers who currently pay above the minimum wage rates may not have to increase employees’ rates of pay. It is important to review and ensure that employee rates remain at least at the minimum after the increase.
  • Employers who pay under annualised salary arrangements should conduct an audit to ensure the arrangements compensate for the award entitlements.
  • Employers who pay under enterprise agreements should ensure the base rates in those agreements remain at least equal to the new minimum award rates.

If you need any help or advice, give us a call 1300 717 721 and we can ensure your compliance with the annual wage increase.

Jodie Fowler

Jodie has almost 30 years of experience in HR across a variety of organisations and industry sectors. As an HR specialist she uses her vast knowledge and experience to provide trusted advice and solutions to all HR Central clients.

Jodie has a Professional Diploma in HR (Deakin University), a Graduate Certificate in Management (Adelaide University) and a Certificate IV in Workplace Training and Assessment.

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