2.5% Wage Increase to Awards and National Minimum Wage
As part of the annual wage review, the Fair Work Commission has today ordered a 2.5% wage increase to the national minimum wage and awards.
The new national minimum wage will be $772.60 per week or $20.33 per hour. This constitutes an increase of $18.80 per week to the weekly rate, or 49 cents per hour to the hourly rate. It is the first time the minimum adult wage is above $20 per hour.
This rate is higher than the increase which was ordered last year of 1.75%.
The new 2.5% increase is higher than the 1.1% CPI increase of the last year and so it keeps wages above the latest rate of inflation.
In conjunction with the Federal income tax cuts ranging from $10 to $44 per week that applies for low and medium taxpayers from July 2021, this constitutes a significant increase in take home pay for a large proportion of the workforce.
For many employers who are still impacted by the effects of COVID – particularly those affected by lockdowns in Victoria – the over CPI wage increase together with the 0.5% increase to statutory superannuation, will be a significant burden on cash flow.
Timing of the increase
Historically, increases to the national minimum wage and modern award minimum wages have taken effect from the first full pay period on or after 1 July. For a majority of modern awards this will still be the case in 2021.
However, the Fair Work Commission once again activated the ‘exceptional circumstances’ clause in the Fair Work Act 2009 to delay the operative date for some industries that continue to be impacted by COVID.
As was the case in last year’s decision, the Commission determined different operative dates of the wage increase for different groups of modern awards. There are 3 operative dates – July, September and November: