The Fair Work Commission (FWC) has announced a 2.5% increase to minimum wages following its 2020-2021 annual wage review (Decision).
Commencement Date
The commencement of the increase will depend on which group the applicable award falls under and will apply from the first full pay period starting on or after:
- Group 1 – 1 July 2021;
- Group 2 – 1 September 2021; or
- Group 3 – 1 November 2021.
Most awards fall into Group 1 and will increase from 1 July including but not limited to the Vehicle Repair, Services and Retail Award (Vehicle Award), Clerks Private Sector Award, Manufacturing and Associated Industries and Occupations Award, Health Professionals and Support Services Award and Social, Community, Home Care and Disability Services Industry Award.
Group 2 includes the General Retail Industry Award 2020 and for Group 3 includes awards where exceptional circumstances justified delayed operative dates.
Vehicle Award
Regarding the operative date for the Vehicle Award, it was stated in the Decision:
We acknowledge that an operative date of 1 July 2021 will mean that businesses
covered by the Vehicle Repair, Services and Retail Award 2020 will face two minimum wage
increases in a 6 month period. But those businesses also had the benefit of no increase in
minimum wages between 1 July 2020 and 1 February 2021. Further, the timing issues is, of
itself, not sufficient to warrant a finding of exceptional circumstances in light of the turnover
data.
Award Employees
Industry Legal Group will update pay guides for member clients once the FWC publishes the variation determinations. The Fair Work Ombudsman (FWO) will also release updated pay guides in due course.
If you are already paying your employee more than the minimum award rate, you may be able to absorb the increase depending on the particular employment arrangements. You can contact us for specific advice on whether absorbing an increase is possible based on individual circumstances.
Enterprise Agreements
If a registered agreement applies to the workplace, you will need to ensure the minimum base rates in the agreement remain at least equal to the base award rates. If not, the agreement rates will need to be increased to match at least match the base award rates.
Award Free Employees
The new national minimum wage that will apply from the first full pay period starting on or after 1 July 2021 will be $772.60 per week or $20.33 per hour. This constitutes an increase of $18.80 per week to the weekly rate or 49 cents per hour to the hourly rate. The national minimum wage applies to employees who aren’t covered by an award or registered agreement.
Superannuation
Also note, the Superannuaiton Guarantee (SG) rate is set to increase to 10% on 1 July 2021. For more infromation, see our recent article.
Next Steps
You should keep an eye out for updated pay guides. In the meantime, you should start reviewing current wage arrangements to determine whether the increase can be absorbed or if you need to budget for the increase.
Now is a good opportunity to review existing employment contracts or if there are no existing employment contracts, implement new employment contracts.
Industry Legal Group can review existing employment contracts and provide you with advice on any amendments required or improvements that can be made. Industry Legal Group can also prepare employment contracts tailored to suit any individual requirements.
Contact Us
Industry Legal Group can provide clients with information and advice on workplace relations and employment law matters. Please contact Industry Legal Group on 1300 736 435 or mail@industrylegalgroup.com.au if you have any question relating to this article or to discuss any issues that arise in your business.
This article is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal Group if you require any legal advice.
17 June 2021
