Fair Work Commission Announces Rise to Minimum Wage

On 30 May 2019, the Fair Work Commission delivered its annual minimum wage decision, raising the National Minimum Wage by 3.0% to $740.80 per week or $19.49 per hour , from 1 July 2019. This represents an increase of $21.60 per week, or 56 cents per hour. The 3.0% also applies to all modern award minimum wages.

This is half of the rate contended for by ACTU (6%), but significantly more than the 1.8% increase contended for by the Australian Chamber of Commerce and Industry.

The Panel, consisting of President Justice Ross, Vice President Hatcher, Deputy President Asbury, Commissioner Hampton, Professor Richardson, Mr Gibbs and Mr Apted, commented that the increase is lower than the increase awarded last year due to the changes in the economic environment, including a recent fall in GDP growth, a drop in inflation, and tax-transfer changes which provided a benefit to low-paid households.

Despite this, the Panel noted that ‘…such an increase will mean an improvement in the real wages for those employees who are reliant on the National Minimum Wage and modern award minimum wages and an improvement in their living standards.’ They particularly noted that ‘a uniform percentage increase will particularly benefit women workers, because at the higher award classification levels women are substantially more likely than men to be paid the minimum award rate rather than a bargained rate.’

At [76], the Panel commented ‘The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid, and to enable them to better meet their needs, by awarding a real increase in the National Minimum Wage and modern award minimum wages.’

The Panel summarised the ‘overall assessment is that the relative living standards of National Minimum Wage and award-reliant employees have improved over recent years, although, some low-paid award-reliant employee households have household disposable incomes less than the 60% of median income poverty line. ‘

ACTU contended that the National Minimum Wage should be set at a rate that lifts single earner couples above 60% median income poverty line. However, the Panel rejected this submission on the basis that the proposed increase ‘would run a significant risk of disemployment and of adversely affecting the employment opportunities of low-skilled and young workers.’

Casual loading will remain at 25%, and in the Business Equipment Award 2010, will increase to 24% consistent with its phasing approach.

IMPLICATIONS

This decision will directly affect employees who have their rate of pay set under the National Minimum Wage, under a modern award or in some cases under an enterprise agreement. Employees employed under enterprise agreements will not generally be affected (unless the applicable modern award base rate is higher than the enterprise agreement rate or the enterprise agreement rates are ‘tied’ to modern award rates).

Once the rates have been updated by the Fair Work Commission in two to three weeks’ time, employers should review the rate of pay for employees whose wages are based on the National Minimum Wage or a modern award. If an increase in an employee’s rate of pay is required by the decision, their wage must be adjusted from the first full pay period on or after 1 July 2019.

Employers considering making enterprise agreements should also turn their minds to the increase in order to satisfy the ‘better off overall test’ for agreement approval on or after 1 July 2019.

The decision can be found by clicking here.