Annual Wage Review

On 2 June 2023, the Full Bench of the Fair Work Commission handed down its annual wage decision, which is a yearly review of the National Minimum Wage order and minimum wages in modern awards.

The Commission held that rates of pay under all modern awards would be increased by 5.75 percent.  That follows an increase of 4.6 per cent or $40 per week, whichever is higher, last year.  The increase to the national minimum wage in July 2022 was 5.2 percent.

In relation to the National Minimum Wage, the Commission determined to align the minimum wage with the current C13 classification wage rate, which is the lowest classification rate applicable to ongoing employment in most awards. It was previously aligned with the C14 classification rate which the Commission stated did not ‘constitute a proper minimum wage safety net for award and agreement free employees in ongoing employment.’ The Commission increased the C13 classification rate by 5.75 percent, resulting in a total increase of 8.6 percent to the National Minimum Wage.

This decision means that the National Minimum Wage will be increased to $882.80 per week, or $23.23 per hour. This is an increase of $70.20 per week, or $1.85 per hour.

The decision will directly affect employees who have their rate of pay set under the National Minimum Wage (award free employees) or under a modern award. The Commission has stated that 20.5 percent of Australian employees are paid in accordance with minimum rates in modern awards, and only about 0.7 percent are paid the National Minimum Wage. It will not affect employees employed under enterprise agreements (unless the applicable modern award base rate is higher than the enterprise agreement rate, or the enterprise agreement otherwise references and applies modern award base rates or increases to them) or those employees receiving higher benefits under a contract of employment.

The new rates of pay will come into operation from the first full pay period on or after 1 July 2023.

Implications

Employers should review the rate of pay for any employees whose salary is based upon the National Minimum Wage or a modern award. If an increase in an employee’s rate of pay is required by the decision, their wages must be adjusted from the first full pay period on or after 1 July 2023.