Australia’s minimum wage is increasing
The Annual Wage Review is in, and Australia’s minimum wage workers are set to receive a 5.75% increase from 1 July 2023.
The Fair Work Commission considered inflationary pressures on households, the gender pay gap and low unemployment rates when reaching their decision. In announcing the increase, the Fair Work Commission highlighted that the decline in real wages is causing significant financial pressure on households and declining living standards caused by failure to meet basic budgetary needs. These adverse effects disproportionately affect female employees and those in less secure employment (such as casual workers).
The increase will impact two groups – National Minimum Wage (NMW) employees and modern award minimum wage earners.
National Minimum Wage (NMW)
The NMW increase will only apply to employees in the national industrial relations system who are not covered by a modern award or enterprise agreement.
Ending an alignment that has existed since 1997, the Fair Work Commission has separated the connection between the NMW and the C14 rate in modern awards, which is the lowest modern award minimum wage rate. The commission noted that there is no requirement in the Fair Work Act for the NMW to align with the lowest modern award adult rate, and the NMW does not operate as a floor to modern award minimum wage rates.
Modern Award Minimum Wages
The Panel has also decided to increase all modern award minimum wage rates by 5.7% from the first pay period on or after 1 July 2023. There are 121 modern awards that apply to employees in the national industrial relations system in various industries and occupations. Each modern award sets minimum wage rates for employees working in the industry, occupations or enterprise covered by the award, usually expressed as yearly, weekly or hourly rates.
An underpayment arises when an employer does not pay an employee their correct entitlements under a contract of employment, the Fair Work Act 2009 (Cth), the National Employment Standards, a modern award or an enterprise agreement. Employees can be underpaid their entitlement to minimum wage, overtime, penalty rates, allowances, leave and loadings.
If you are one of the 2.67 million Australians expected to be impacted by this decision, ensure you know which changes apply to you and that you receive the correct pay in your first full pay period after 1 July.
Written by Trent Hancock
Disclaimer: This article should not be construed as legal advice and is not intended as such. If readers wish to obtain advice about anything contained in this article, they should speak with a lawyer and discuss their individual circumstances.