Fair Work Commission announces a 2.4% minimum wage increase

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By Lisa Anaf, Partner, and Diana Diaz, Senior Associate

The Fair Work Commission’s expert panel has finalised its annual wage review for the year and handed down a decision to increase minimum wages.

Before the panel arrived at its decision, the Australian Government had submitted that “the Panel should take a cautious approach, taking into account the risks to the economic outlook and the need to boost employment and job creation, as well as maintaining wages for those on the minimum wage and those on award classification wages.”[1]

These sentiments were echoed in submissions by business and industry groups, some of whom sought no increase, or only modest increases of anywhere between 1.1% and no more than 2%.[2]  In comparison, the ACTU had sought increases of between 3.9% and 4.6% depending on employee classification levels.[3]

The panel also considered the status of the economy, including a forecast increase to CPI of 1.25% in 2015/16 and continued “low wages growth.”[4]

Following its review, the panel has decided to increase minimum rates from the first full pay period on or after 1 July 2016 as follows:

  • the national minimum wage will increase by 2.4% to $672.70 per week or $17.70 per hour;[5] and
  • modern award minimum wages will also increase by 2.4% (with weekly wages rounded to the nearest 10c).[6]

This increase follows what the panel called a “moderate” increase of 2.5% in 2015

Are you ready for 1 July?

Because of the upcoming Federal election, we have seen (and will no doubt continue to see) a significantly heightened media focus on breaches of workplace relations laws.  Over the last year we have also witnessed a dramatic increase in Fair Work Ombudsman activity, including spot checks and audits.

Harsh penalties of up to $54,000 per contravention apply to employers who fail to meet their minimum wage obligations[7].  The Turnbull Government has also released new policies which confirm that if they are returned to Government that these penalties will be increased significantly.  For these reasons, there is no better time for businesses to self-audit employee wages and terms and conditions to ensure compliance before the regulatory bodies or employees do so on your behalf.

[1] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [174].
[2] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [167] to [172] and [183] to [186].
[3] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [156] and [157].
[4] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [322].
[5] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [102].
[6] Annual Wage Review 2015–16 [2016] FWCFB 3500 at [104] and [105].
[7] Sections 45 and 293 of the Fair Work Act 2009 (Cth)

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

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