Monday, 22 June 2020

Minimum Wage Increase 2020

Minimum Wage Increase

Last week, we published an article discussing the progress of the annual wage review by the Fair Work Commission (See HR Legal’s article: ‘Will there be a minimum wage increase in 2020?)

The Fair Work Commission’s Expert Panel finalised its decision about this year’s review earlier than anticipated and has now announced its decision to order an increase to the national minimum wage and modern award minimum wages of 1.75%.

The new national minimum wage will be $753.80 per week or $19.84 per hour. This constitutes an increase of $13.00 per week to the weekly rate, or 35 cents per hour to the hourly rate.

This rate is substantially lower than the increase which was ordered last year of 3.0%, which is of course largely attributable to the impacts of the COVID-19 pandemic on the Australian economy.

The increase is lower than the latest consumer price inflation figure of 2.2%.

The increase

The Expert Panel considered various submissions from interested parties. The Australian Government urged the Expert Panel to adopt a “cautious approach” to the annual wage review but did not propose a specific quantum increase. This is echoed by employer groups who are advocating for a 0% wage increase, or otherwise staggered increases for certain employers and employees due to COVID-19. Conversely, the Australian Council of Trade Unions argued that the Expert Panel should deliver a 4% increase, particularly given the Government’s provision of wage subsidies.

In making its decision, the Expert Panel acknowledged the significant impact of the COVID-19 pandemic and the measures in response to contain the spread of the virus on the way we work, on society and on the economy. The Panel also had to balance the perspective of employees, as well as employers.

It said that no increase would mean that the living standards of low-paid award-reliant employees would fall, and any increase that was less than increases in prices and living costs would further disadvantage those employees and put them at greater risk of moving into poverty. On the other hand, a significant increase would pose a risk of disemployment and could affect employment opportunities, particularly for lower skilled and young workers.

Ultimately, the Expert Panel found that a modest increase of 1.75% – that is substantially lower than last year’s increase – was appropriate.

Also the Expert Panel noted that while the impact of the pandemic has been felt across the Australian economy, the impact has not been consistent across all sectors and some industries have been more substantially affected than others. This impacted the Panel’s decision about the timing of the increase.

Timing of the increase

Historically, any 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.

However, employer groups encouraged the Expert Panel to activate the ‘exceptional circumstances’ clause in the Fair Work Act 2009 to delay the operative date for any increase until 15 July 2020, or otherwise stagger increases for certain employers and employees due to COVID-19.

In considering the timing of the increase, the Expert Panel analysed data from the ATO and the ABS and determined that the impact of COVID-19 had not been consistent across all sectors of the economy.

On this basis, in a first since the modern award system was introduced in 2010, the Expert Panel determined different operative dates of the wage increase for different groups of modern awards:

• Group 1 – 1 July 2020 (Click here for full list)

GROUP 1 AWARDS: 1 July 2020
Modern awards
Aboriginal Community Controlled Health Services Award 2020
Aged Care Award 2010
Ambulance and Patient Transport Industry Award 2020
Banking, Finance and Insurance Award 2020
Cemetery Industry Award 2020
Children's Services Award 2010
Cleaning Services Award 2020
Corrections and Detention (Private Sector) Award 2020
Educational Services (Schools) General Staff Award 2020
Educational Services (Teachers) Award 2010
Electrical Power Industry Award 2020
Fire Fighting Industry Award 2020
Funeral Industry Award 2010
Gas Industry Award 2020
Health Professionals and Support Services Award 2020
Medical Practitioners Award 2020
Nurses Award 2010
Pharmacy Industry Award 2020
Social, Community, Home Care and Disability Services Industry Award 2010
State Government Agencies Award 2020
Water Industry Award 2020
Modern enterprise awards and state reference awards
Australian Capital Territory Public Sector Enterprise Award 2016
Australian Federal Police Enterprise Award 2016
Christmas Island Administration Award 2016
Reserve Bank of Australia Award 2016
Northern Territory Public Sector Enterprise Award 2016
Nurses and Midwives (Victoria) State Reference Public Sector Award 2015
Nurses (ANMF – Victorian Local Government Award) 2015
Victorian Government Schools Award 2016
Victorian Government Schools – Early Childhood – Award 2016
Victorian Local Government (Early Childhood Education Employees) 2016
Victorian State Government Agencies Award 2015

The modern awards in Group 1 cover industries less affected by the pandemic, including frontline health care and social assistance workers, teachers and childcare workers, and workers engaged in other essential services, who have continued working throughout the pandemic.

Minimum wages for modern awards in Group 1 will increase by 1.75%, as normal from the first full pay period on or after 1 July 2020.

• Group 2 – 1 November 2020 (Click here for full list)

GROUP 2: 1 November 2020
Modern awards
Aluminium Industry Award 2020
Animal Care and Veterinary Services Award 2020
Aquaculture Industry Award 2020
Architects Award 2020
Asphalt Industry Award 2020
Australian Government Industry Award 2016
Black Coal Mining Industry Award 2010
Book Industry Award 2020
Broadcasting, Recorded Entertainment and Cinemas Award 2010
Building and Construction General On-site Award 2010
Business Equipment Award 2010
Car Parking Award 2020
Cement, Lime and Quarrying Award 2020
Clerks—Private Sector Award 2010
Coal Export Terminals Award 2020
Concrete Products Award 2020
Contract Call Centres Award 2020
Cotton Ginning Award 2020
Dredging Industry Award 2020
Educational Services (Post-Secondary Education) Award 2020
Electrical, Electronic and Communications Contracting Award 2010
Food, Beverage and Tobacco Manufacturing Award 2010
Gardening and Landscaping Services Award 2020
Graphic Arts, Printing and Publishing Award 2010
Higher Education Industry-Academic Staff-Award 2020
Higher Education Industry-General Staff-Award 2020
Horticulture Award 2010
Hydrocarbons Field Geologists Award 2020
Hydrocarbons Industry (Upstream) Award 2020
Joinery and Building Trades Award 2010
Journalists Published Media Award 2010
Labour Market Assistance Industry Award 2020
Legal Services Award 2020
Local Government Industry Award 2020
Manufacturing and Associated Industries and Occupations Award 2020
Marine Towage Award 2020
Maritime Offshore Oil and Gas Award 2020
Market and Social Research Award 2020
Meat Industry Award 2020
Mining Industry Award 2020
Miscellaneous Award 2020
Mobile Crane Hiring Award 2010
Oil Refining and Manufacturing Award 2020
Passenger Vehicle Transportation Award 2020
Pastoral Award 2010
Pest Control Industry Award 2020
Pharmaceutical Industry Award 2010
Plumbing and Fire Sprinklers Award 2010
Port Authorities Award 2020
Ports, Harbours and Enclosed Water Vessels Award 2020
Poultry Processing Award 2020
Premixed Concrete Award 2020
Professional Diving Industry (Industrial) Award 2020
Professional Employees Award 2020
Rail Industry Award 2020
Road Transport (Long Distance Operations) Award 2020
Road Transport and Distribution Award 2020
Salt Industry Award 2010
Seafood Processing Award 2020
Seagoing Industry Award 2010
Security Services Award 2020
Silviculture Award 2020
Stevedoring Industry Award 2020
Storage Services and Wholesale Award 2020
Sugar Industry Award 2020
Supported Employment Services Award 2020
Surveying Award 2020 MA000066 Telecommunications Services Award 2010
Textile, Clothing, Footwear and Associated Industries Award 2010
Timber Industry Award 2010
Transport (Cash in Transit) Award 2020
Waste Management Award 2020
Wool Storage, Sampling and Testing Award 2010
Modern enterprise awards and state reference awards
Aboriginal Legal Rights Movement 2016
Australia Post Enterprise Award 2015
Australian Broadcasting Corporation Enterprise Award 2016
Australian Bureau of Statistics (Interviewers) Award 2016
Australian Nuclear Science and Technology Organisation (ANSTO) Enterprise Award 2016
Australian Public Service Enterprise Award 2015
Chullora Printing Award 2015
CSIRO Enterprise Award 2016 GrainCorp Country Operations Award 2015
Metropolitan Newspapers (South Australia and Tasmania) Printing Award 2015
Northern Territory News Award 2015
Note Printing Australia Award 2016
Optus Award 2015
Parliamentary Departments Staff Enterprise Award 2016
Printing Industry – Herald & Weekly Times – Production Award 2015
Queensland Newspapers Pty Ltd Printing (Murrarie) Award 2015
Telstra Award 2015
Victorian Local Government Award 2015
Victorian Public Service Award 2016
Viterra Bulk Handling and Grain Storage, Pulses and Minerals Award 2015

The modern awards in Group 2 cover workers adversely impacted by the pandemic, but not to the same extent as the sectors covered by the Group 3 awards. This includes construction workers, manufacturing workers, and workers from a range of other industries.

The Expert Panel was satisfied that there were exceptional circumstances that allow a delayed operative date for the 1.75% increase from the first full pay period on or after 1 November 2020.

• Group 3 – 1 February 2021 (Click here for full list)

GROUP 3: 1 February 2021
Modern awards
Air Pilots Award 2020
Aircraft Cabin Crew Award 2020
Airline Operations-Ground Staff Award 2020
Airport Employees Award 2020
Alpine Resorts Award 2020
Amusement, Events and Recreation Award 2020
Commercial Sales Award 2020
Dry Cleaning and Laundry Industry Award 2020
Fast Food Industry Award 2010
Fitness Industry Award 2010
General Retail Industry Award 2010
Hair and Beauty Industry Award 2010
Horse and Greyhound Training Award 2020
Hospitality Industry (General) Award 2020
Live Performance Award 2010
Mannequins and Models Award 2020
Marine Tourism and Charter Vessels Award 2020
Nursery Award 2020
Professional Diving Industry (Recreational) Award 2020
Racing Clubs Events Award 2010
Racing Industry Ground Maintenance Award 2020
Registered and Licensed Clubs Award 2010
Restaurant Industry Award 2020
Sporting Organisations Award 2020
Travelling Shows Award 2020
Vehicle Repair, Services and Retail Award 2020
Wine Industry Award 2010
Modern enterprise awards and state reference awards
Airservices Australia Award 2016

The modern awards in Group 3 cover workers which have been most adversely affected by the pandemic, such as those in accommodation and food services, arts and recreation services, aviation, retail, and tourism.

The Expert Panel was satisfied that there were exceptional circumstances that allow a delayed operative date for the 1.75% increase from the first full pay period on or after 1 February 2021.

What Should You Do?

Employers must satisfy the new minimum payment obligations for all relevant staff from the operative date in their industry and modern award/s. This includes for an employee for whom the employer receives the JobKeeper subsidy.

Ahead of the increase, employers should carefully review their wage arrangements and implement the necessary wage increases to ensure minimum wage rates are at least commensurate with the underpinning modern award.

Employers paying above-award payments should also review such arrangements to ensure that they are high enough to accommodate the increases (provided they are also supported by the necessary individual flexibility or other agreements).

Further, as a minimum, employers must continue to provide the minimum 9.5% superannuation contributions to the employees’ complying funds, calculated against Ordinary Time Earnings, to avoid liability to pay the Superannuation Guarantee Charge.

Finally, employers should consider any implications of the increase to minimum wages for employees who have been issued JobKeeper enabling stand down directions or agreements.

This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.