Fair Work Commission announces 1.75% increase to the national minimum wage

The Full Bench of the Fair Work Commission has today determined an increase to the National Minimum Wage of 1.75%, and for the same increase to be applied to the minimum rates in each Modern Award.   It is to be noted that in a break from the past, the increases to Award rates of pay will take place on a staged basis.

In the Full Bench’s decision, the Commission made the following comments in relation to the decision to award an increase given the present economic circumstances:

[105] A degree of tension exists between some of the considerations we are required to take into account. For example, the extent to which minimum wage increases are able to meet the needs of the low paid may, depending on the magnitude of the increase and the prevailing circumstances, be constrained by the potential impact of such increases on employment. This is particularly relevant in the present context.

[139] We have decided to award a substantially lower increase this year than that awarded last year due to the marked change in the economic environment and the tax-transfer system and other changes which have taken effect in the current Review period which have benefitted low-paid households. The increases we have awarded are likely to maintain the real value of the wages of NMW and award-reliant employees.

The effect of the increase will mean that the National Minimum Wage will increase from 1 July 2020 by $13.00 per week, from the current $740.80 per week ($19.49 per hour) to $753.80 per week ($19.84 per hour).

The Commission considered data made available to the Review, and based on the apparent economic impact the global pandemic has had on various industries and sectors, has determined the 1.75% increase will take effect as follows (subject to the Commission receiving submissions from interested parties by 25 June 2020 on the Determinations of each Award variation on the increases):

1 July 2020 – National Minimum Wage & Group 1 Awards

  • Frontline health care and social assistance workers
  • Teachers & child care workers
  • Other essential services

1 November 2020 – Group 2 Awards

  • Construction
  • Manufacturing
  • A range of other industries

1 February 2021 – Group 3 Awards

  • Accommodation & food services
  • Arts & recreational services
  • Aviation
  • Retail trade
  • Tourism

An outline of Modern Awards (Groupings and Operative Dates) can be reviewed in Fair Work Commission’s Summary Decision (from page 14) which can be accessed here

Employers should ensure that where the Modern Award rate is being paid, the increase is passed on to their Award-covered employees in accordance with their Award and the applicable timeline.

It is also essential that Employers review pay rates for employees currently receiving over-Award payments, or engaged under Enterprise Agreements, to ensure that they do not underpay their employees when compared against the revised award rates, and/or continue to comply with the remuneration provisions of the Enterprise Agreement.

Contacted Aitken Legal for any enquiry about the wage increase and its application to remuneration arrangements, including through Modern Awards and Enterprise Agreements.

Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.