The Fair Work Commission (Commission) handed down its decision this morning following its annual wage review. The decision is said to directly impact over 2.2 million employees and indirectly affect many more.
The minimum wage will be increased to $753.80 a week (that is, $19.84 per hour) from 1 July 2020.
The Commission received various proposals and submissions from the federal government, state governments, unions, employer representatives and various other interested bodies and departments.
The Australian Council of Trade Unions proposed an increase of the minimum wage by 4% and various employer bodies proposed there should be no increase at all to the minimum wage, in consideration of COVID-19 and the resulting economic downturn.
The Australian federal government did not make any specific proposals in regard to the quantum, but rather focused on finding a solution which would preserve jobs in Australia.
After consideration of various factors, the majority of the panel in the Commission determined to increase the National Minimum Wage by 1.75%. This percentage increase will also apply to wage rates set out in Modern Awards, but on staggered dates.
In reaching its decision, the Commission considered (amongst various other things) that while there has been a significant decrease in hours worked around the country and an increase in unemployment, not increasing the minimum wage at all could result in pushing low income families/individuals into poverty. Taking a balanced approach, the Commission has significantly decreased the percentage of the increase to the wages relative to last year, which was 3%.
As noted above, the 1.75% increase will equate to a minimum hourly wage of $19.84 which on a 38 hour week will be $753.80. This is an increase by $13 per week compared to the current minimum wage.
Whist the 1.75% increase to the minimum wage rate will take effect as from 1 July 2020, the increase to the wage rates set out in Modern Awards will differ, depending on the Award. The Commission received submissions from various interested parties in this respect. The Commission determined to apply a staggered approach in implementing this increase across the various Modern Awards. To achieve this, the Commission has split the various Modern Awards into three groups. The 1.75% increase to wage rates in Modern Awards will come into effect from:
- 1 July 2020, in regard to the National Minimum Wage and Awards in "Group 1"
- Awards in Group 1 relate to industries that are relatively less impacted by COVID-19 and have generally not seen a reduction in work hours. The employees employed in these industries have continued to work in these difficult times, often working at the frontlines, putting their lives at risk. This includes, but is not limited to, frontline health care and social assistance workers, teachers and child care workers and other essential services.
- The Commission estimates that about 25% of award covered employees in Australia will be in Group 1.
- A list of Awards under Group 1 can be found at pages 115 & 116 of the Decision.
- 1 November 2020 for Awards in "Group 2"
- Awards in Group 2 generally relate to industries that have been adversely effected by COVID-19, but not as much as "Group 3".
- The Commission estimates that about 40% of award covered employees are likely to be covered by Group 2. For example, construction, manufacturing and a range of other industries.
- A list of Awards under "Group 2" can be found at pages 117-120 of the Decision.
- 1 February 2021 for Awards in "Group 3"
- Awards in Group 3 generally relate to industries and sectors that have been most adversely affected by COVID-19. For example, accommodation and food services, arts and recreation services, aviation, retail trade and tourism.
- The Commission estimates that about 35% of award covered employees in Australia will be in "Group 3".
- A list of awards under "Group 3" can be found at pages 121 & 122 of the Decision.
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