Summary
The Minimum Wage Panel of Fair Work Australia announced this morning that minimum award wages will increase across the board by 2.9% effective 1 July 2012. This decision will result in the following increases to Federal minimum wages:
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Weekly minimum wage: from $589.30 to $606.40 (increase of $17.10)
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Hourly minimum rate: from $15.51 to $15.96 (increase of 45c)
The Decision
Overall, the Panel stated that the economic outlook for FY13 was sufficiently sound to justify an increase to minimum wages. A number of significant factors of uncertainty, including global risks and uneven growth outlook, were said to cause difficulties in forming a clear view of current and prospective economic performance. Such uncertainties were taken into account when assessing the level of increase to minimum wages, which was down from last year's 3.4% across-the-board increase.
A number of submissions to the panel stated that proposed increases to the Superannuation Guarantee Charge (SGC), beginning on 1 July 2013, should be taken into account. The SGC rate will increase gradually from 9% to 12% from 1 July 2013, beginning with an increase to 9.25% effective 1 July 2013. The Panel stated that it was not appropriate to consider increases to the SGC rate, as these increases are not due to take effect until next year. However, the Panel did indicate that the SGC rate will be further considered in the next Annual Wage Review.
Next Steps
Employers should now start to review their employees' existing rates of pay to ensure compliance with minimum rates when the above changes commence on 1 July 2012.
Employers should be mindful of transitional provisions in applicable modern awards that impact on how minimum award wages are calculated. For most employers, the above increases will not be as simple as applying the percentage increase to existing minimum award rates of pay. Transitional provisions in most awards require that affected employers take into account pre-modern award rates of pay and stepped adjustment rates over a transitional period ending on 1 July 2014.
Please do not hesitate to contact us for further assistance in understanding your organisation's obligations with respect to increases to minimum rates of pay.
