The Fair Work Commission’s Expert Panel has handed down its annual wage review ruling granting a 3% wage increase to the national minimum wage and all modern award minimum wages. From Monday 1 July 2019 the national minimum wage will be $740.80 weekly or $19.49 hourly.
It is estimated by the Panel that approximately 21% (or 2.2 million) of employees in Australia will be affected by the increases afforded by this year’s review. In making its decision, the Panel was required to consider:
the need to encourage collective bargaining;
the living standards and needs of the low paid;
the economic climate;
the promotion of increased workforce participation; and
the principle of equal remuneration for comparable work.
Whilst the Panel’s review found that the Australian economy is performing well and the labour market is strong, it was decided to award a lower increase than last year. This is because of changes in the economic environment (a fall in GDP growth and inflation) and changes in tax that have provided a benefit to low-paid workers (the introduction of the Low and Middle Income Tax Offset and the increase in the Medicare levy’s low-income threshold).
This is a timely reminder to employers to review and update their payroll systems to ensure they are meeting the legal obligations. With underpayment claims increasing in prevalence, employers should be vigilant of their responsibilities. Employees who are currently paid in accordance to the national minimum wage or the minimum award wages are entitled to the 3% increase. This includes junior and trainee employee wages. Importantly, the increases take effect from the start of the first full pay period that starts on or after 1 July 2019.
Employers should note that this decision will also have implications for:
Enterprise bargaining negotiations;
Enterprise agreement approvals (through the Better Off Overall Test); and
For further information or for assistance in conducting a review of the payroll obligations for your business, please contact: