Fair Work Commission announces 2.5% minimum wage increase, effective 1 July

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By Lisa Anaf, Partner and Diana Diaz, Senior Associate

The Fair Work Commission has finalised its annual wage review for the financial year 2015 / 2016 and handed down a decision to increase minimum wages.

The panel decided to award what it called a “moderate” increase from the first full pay period on or after 1 July 2015 as follows:

  • the national minimum wage will increase by 2.5% to $656.90 per week or $17.29 per hour; and
  • modern award minimum wages will increase by 2.5% (with weekly wages rounded to the nearest 10c).

This is compared to the 3% awarded in 2014 and 2.6% awarded in 2013.

As it is required to do in arriving at its decision, the expert panel considered a range of matters including trends and forecasts in the economy, social factors, as well as submissions from a range of interested parties.

In deciding on an increase of 2.5%, the panel cited a “reduction in inflation and aggregate wages growth” over the past year, a growth in the unemployment rate, along with the 2015–16 Budget Strategy and Outlook.

Are you ready for 1 July?

Harsh penalties of up to $51,000 per contravention apply to employers who fail to meet their minimum wage obligations so we encourage employers to use the next few weeks to conduct an audit of their employees’ pay to make sure they are ready to comply on 1 July.

For employees paid in accordance with minimum wages in modern awards (or the national minimum wage), this means ensuring that payroll systems are ready to pass on the increased wages from the first full pay period on or after 1 July 2015.

Employers with enterprise agreements will need to ensure that the base rate of pay payable to employees under the agreement does not fall below the applicable base rate of pay under the relevant modern award (or the national minimum wage, if applicable).

For employees on annualised salaries, employers will need to consider whether that salary is still sufficient to cover the employees’ minimum entitlements taking into account the increased national minimum wage (or their respective modern award wage).

For further information, please do not hesitate to contact us.

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