On 15 June 2022, the Fair Work Commission announced that the national minimum wage, which applies to award free employees, will increase by 5.2%. The new weekly national minimum wage for an adult full-time employee working 38 hours per week will be $812.60 per week or $21.38 per hour.
For employees covered by modern awards the increase will be 4.6% subject to a minimum increase for adult award classifications of $40 per week.
Similar to last year, the dates the increases come into effect will be staggered, with industries most impacted by COVID-19 being given more time before the increase becomes law. Businesses will have to comply with the increase on one of two dates, as explained further below.
What date does the increase take effect?
For most businesses the increase will take effect on the first full pay period on or after 1 July 2022. This will apply to the national minimum wage and to most modern awards.
For awards applying to businesses in the aviation, tourism and hospitality industries the date of the increase will be the first full pay period on or after 1 October 2022.
The awards subject to the 1 October 2022 increase date are as follows:
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Air Pilots Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Alpine Resorts Award 2020
- Hospitality Industry (General) Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Registered and Licensed Clubs Award 2020
- Restaurant Industry Award 2020.
What about employers covered by enterprise agreements?
The Fair Work Act 2009 operates so that the base rate of pay under an enterprise cannot fall below the base rate of pay in the modern award that would apply to an employee if they were not covered by the enterprise agreement (subject to the enterprise agreement having more beneficial terms on wage increases). This means that for any business who operates under an enterprise agreement, it is important that they are aware of which modern awards underpin their agreement, and that they determine whether the award increases mean that the award rate has overtaken the enterprise agreement rate. If it has, then the award rate must be paid instead.
What about allowances?
A decision on new allowance rates under modern awards is expected soon.
We’re already paying above the award rate. Do we need to increase rates of pay?
Minimum rates in modern awards are exactly that, minimum rates. If you are already paying “above award” rates there will be no need to increase rates, unless of course the increase will mean that the new award rates overtakes what you are currently paying.
Super rates are also increasing on 1 July 2022
Employers should also be aware that the superannuation guarantee rate is increasing by 0.5% from 10% to 10.5% on 1 July 2022.This is part of a staged increase that will see the rate increase to 12% over the next 3 years. It may be possible for employers to arrange matters so that these increases are absorbed into employees’ salaries if an employee’s contract clearly states that they are paid a total salary package inclusive of superannuation and that when the superannuation rate increases, their overall salary package will remain the same. Please contact us if you require further advice in this area.
Need Help Further?
If you need further help determining which modern award(s) apply to your business, or assistance in working out how the minimum wage increase will affect your business (including if you operate under an enterprise agreement), please contact Employment Innovations.
About Employment Innovations
Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.