Minimum Wage Increased Today

In its annual review, the Fair Work Commission’s Expert Panel has today ordered an increase of 3% to all minimum weekly pay rates contained in modern awards. An equivalent increase will apply to the hourly award rates, calculated on a 38 hour week.

The federal minimum wage for award-free employees will also increase from $622.20 to $640.90 per week, or from $16.37 to $16.87 per hour, that is, an increase of $18.70 per week or 50c per hour.

The decision takes effect from the first pay period on or after 1 July 2014.

In making its decision, the Expert Panel took into account the increase to compulsory employer superannuation contributions, known as the superannuation guarantee rate (“SG rate”), due on 1 July 2014 and commented that the minimum wage increase is lower than it otherwise would have been in the absence of the SG rate increase.

From 1 July 2014, the SG rate will increase from 9.25% to 9.50%. The SG rate will remain 9.50% until 30 June 2018 and will then increase each year until it reaches 12% in 2022-2023.

What should you do?

From the first pay period on or after 1 July 2014, employers must satisfy the new minimum payment obligations for all relevant staff.

Employers should now carefully review their wage arrangements, so as to:

• Identify the modern awards or other instruments operating within the workforce, and which work classifications apply
• Compare existing pay rates, and implement the necessary wage increases, with effect from the first period following 1 July 2014

Employers paying above-award payments should also review their conditions 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 provide the minimum 9.50% superannuation contributions to the employees’ complying funds, calculated against Ordinary Time Earnings, to avoid liability to pay the Superannuation Guarantee (SG) Charge.

If you have any questions regarding your minimum pay obligations, or the increase to minimum superannuation contributions, do not hesitate to contact HR Legal.

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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.