Annual wage review decision handed down

By now we are all aware of the outcome of the Fair Work Commission’s annual wage review decision. We have summarised the decision and have answered some of the questions we have received.

The Decision:

The Commission announced a 5.2% increase to the national minimum wage, bringing it to $812.60 per week ($21.38 per hour).

Workers covered by modern awards and who are reliant on modern award rates will see a 4.6% increase to those rates.

The changes for most but not all modern awards, will come in from 1 July 2022.

The Commission delayed the introduction of the increases for some modern awards due to exceptional circumstances caused by the impact of the pandemic in the aviation, hospitality and tourism sectors. As a result, employers covered by the following modern awards will not have to implement the wage 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 Agreement 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

Common questions:

1. Is this in addition to the increase in superannuation that employers are required to pay?

Yes.

Minimum wage increases are in addition to the increase in compulsory employer superannuation guarantee contribution payments, which will be 10.5% of ordinary time earnings from the first payroll processed in July 2022.

Additionally, from 1 July 2022 the minimum $450 per month threshold for superannuation guarantee eligibility contributions will be removed, expanding coverage of super guarantee payments to eligible employees regardless of monthly pay.

2. Does this affect my staff who are covered by enterprise agreements?

Only to the extent you must ensure that the base rates in your enterprise agreement are at least those prescribed in the relevant modern award for the classification of work, unless the enterprise agreement requires you to pass on modern award adjustments – this must be carefully checked.

3. When will the new award rates be published?

The new rates have not yet been published by the Fair Work Commission. Draft determinations will be released on the Fair Work Commission website for submissions in the coming week, with the final determinations (which contain the rates) to be published thereafter.

As an indication, the final determinations for last year’s wage review were published on 25 June 2021.

4. Are employee allowances impacted?

Yes, if paid in accordance with the modern award. Any changes to allowances as provided by the modern awards will be published as a separate determination, which is released concurrently with the wage determination.

We recommend that once all determinations are published, employers conduct a complete review of their payroll systems so that they are ready to implement both the superannuation increase, and if applicable, the award pay rate increase.

EMA Legal can assist employers with all queries related to modern award terms and coverage.