Today the Fair Work Commission handed down its decision to increase the national minimum wage by 3%. This follows an increase of 3.5% last year.
When the Fair Work Commission decides to increase the minimum wage from 1 July each year, the same increase is applied to all Modern Awards.
So if you employ staff under a Modern Award, you will need to ensure that from 1 July 2019, you are paying them at least their new Award rate. This new Award rate will be 3% higher than the minimum you are required to pay now and will be applicable from the first full pay period commencing on or after 1 July 2019.
This is also important to keep in mind when doing your next round of salary reviews. Given that Award rates will now have increased by 7.5% over a two year period, this is likely to be a relatively higher increase than CPI alone. Last year CPI only increased by 2.1% (annually to June 2018 and the June 2019 figures are yet to be released) so if your business usually only applies a CPI increase, your salary rates may be slipping closer to, or below, Award minimums.
It may be time to look beyond CPI this year and ensure that any increase for Award employees take into consideration the increase to Award rates. Of course, this is a balancing act and any salary or wage increase needs to take into account a wide range of factors.
It is extremely important that you know which Award your staff are covered by, you know which classification they fall under, and you know their relevant Award rates. Employers must not pay below any applicable Award rate, otherwise they will be underpaying staff and may be subject to an investigation by the Fair Work Ombudsman(FWO) (which may include fines and penalties).
There is a huge amount of terrific, free information about employing staff available on the Fair Work Ombudsman website. This is an essential reference for any employer. The FWO also has an Award finder and each Award has a Pay Guide which simply sets out what Award rates apply, depending on who is working and when they are working. You can also use their P.A.C.T pay calculator to calculate base pay rates, allowances and penalty rates (including overtime).
And for those tricky questions about employing staff, Robertson Hyetts is always here to help. Call our friendly Employment Lawyers, Katherine Hietbrink or Kayla Kristensen for advice on 5434 6666.