On Friday, June 2nd, the Fair Work Commission released its annual wage review decision.
The Commission has chosen to raise the minimum wages in all modern awards by 5.75%. These increases will go into effect from the first full pay period starting on or after July 1, 2023.
Additionally, the National Minimum Wage has been increased from $21.38 per hour to $23.23, marking an 8.65% increase.
The Commission has also expressed its intention to address significant concerns regarding the potential undervaluation of work in female-dominated industries and occupations. They plan to initiate work on this matter soon.
Size of the Increase:
This decision grants workers the largest increase in decades, influenced by the current inflationary environment that businesses and workers are facing.
Business NSW and Australian Business Industrial proposed a more moderate increase of 3.5% for 2023. However, the Commission ultimately settled on the higher figure that will now be implemented.
The Commission acknowledged the forthcoming rise in the Superannuation Guarantee contributions rate to 11% from July 1, 2023, which had a moderating effect on their decision.
Changes to Modern Awards:
The minimum wages in all modern awards will be raised by 5.75%. These changes will take effect from the first full pay period commencing on or after July 1, 2023, for all modern awards. This deviates from previous years when the Commission staggered the implementation of increases due to the COVID-19 pandemic.
Changes to the National Minimum Wage:
The Commission took a two-step approach to the National Minimum Wage.
Traditionally, the National Minimum Wage was linked to the C14 wage level, an introductory/training wage found in certain modern awards. However, the Commission determined this linkage to be inappropriate and proposed aligning the minimum wage with the C13 wage level, the lowest classification rate for ongoing employment in most modern awards.
In addition to the change in alignment, the Commission decided to increase the National Minimum Wage by 5.75%.
Combining the alignment change and the 5.75% increase results in the National Minimum Wage rising from $812.60 per week or $21.38 per hour to $882.80 per week or $23.23 per hour, representing a total increase of over 8.6%.
Casual award/agreement-free employees will continue to be covered by a default casual loading of 25%.
Gender Equality Issues:
Due to the scope and timing of the current review, the Commission was unable to address significant concerns regarding the potential undervaluation of work in female-dominated industries and occupations.
The Commission has announced that it will soon launch a research project to identify occupations and industries that may be affected by this undervaluation. The findings from this project will serve as the basis for future proceedings.
While no specific details were provided, the Commission emphasized that resolving these gender equality issues in a timely manner is a top priority.
Action Required:
Employers should ensure that employees who are paid according to a modern award or the National Minimum Wage receive the appropriate pay increase by the relevant effective date.
For employers who do not strictly adhere to award terms (e.g., paying above award rates, annual salaries, or flat rates), it is important to ensure that their payments will still meet all obligations under the relevant award/minimum wage once the increases take effect.
Employers who pay in accordance with an enterprise agreement should ensure that the base rates of pay under the agreement are no lower than the increased relevant modern award rates of pay, especially if the agreement was made several years ago.
Effective Date of the Changes:
The changes will be implemented starting from the first full pay period on or after July 1, 2023.
To access the Commission’s decision, click here. A summary of the decision is also available here.
For further information, the new rates will be gradually updated on online awards over the next few weeks, accessible here.
If you need any help interpreting these changes, awards and updating your payroll systems please contact our bookkeeping support team on 1300 300 013 or support@onventure.com.au.