The federal minimum award weekly wage increase
Fair Work Australia's minimum wage panel has increased federal award minimum weekly wages by A$17.10 a week to A$606.40. This increase, from the current minimum rate of A$589.30 a week, will commence from the first full pay period on or after 1 July 2012.
The federal minimum hourly rate will increase by A$0.45 to A$15.96 an hour from the first full pay period on or after 1 July 2012.
The decision, which was delivered on Friday 1 June 2012, is based on a 2.9% increase in minimum award wages. This follows a 3.4% increase in minimum award wages last year. Fair Work Australia President Justice Iain Ross said, in describing the 2.9% increase as "moderate", that it will "improve the real value of award wages and assist the living standards of the low paid".
Increases will also apply to minimum wage rates for employees with disability, junior employees and to employees to whom training arrangements apply.
Employees with a disability
In addition to the minimum wage increases for award employees, the national minimum wage order will:
- increase the minimum wage for award/agreement free employees with disability whose productivity is not affected to A$606.40 per week or A$15.96 per hour based on a 38 hour week
- enable the minimum wage for award/agreement free employees with disability whose productivity is affected to be assessed under the supported wage system, subject to a minimum payment fixed under the Supported Wage Scheme Schedule.
Junior employees
The 2.9% increase will apply to junior employees' wages under modern awards.
The national minimum wage for award/agreement free junior employees will be calculated based on the junior wage percentage scale in the Miscellaneous Award 2010.
Trainees
The 2.9% increase will apply to wages for trainees set out in the National Training Wage Schedule which is attached to most modern awards.
For award/agreement free employees to whom training arrangements apply, the apprentice provisions in the Miscellaneous Award 2010 will apply.
Adult apprentices should not receive less than the national minimum wage.
Casual employees
The casual loading under modern awards will be maintained at 25%. A casual loading of 23% will apply for award/agreement free employees.
Transitional instruments (including Division 2B State enterprise awards)
From the first full pay period on or after 1 July 2012, wage rates in transitional instruments, including Division 2B State enterprise awards, will increase by 2.9% per week, with corresponding increases in hourly rates based on a 38 hour week.
Wage rates in Division 2B State awards relating to Queensland trainees, apprentices and employees subject to specific Queensland labour market programs will be varied to achieve parity with minimum wages in the corresponding transitional Australian Pay and Classification Scales and State reference transitional awards.
Impact for employers
The minimum wage increases will commence from the first full pay period on or after 1 July 2012 – less than one month away. Employers should contact payroll service providers and payroll personnel now to provide instructions to review the rates of pay that apply to employees and ensure that the increased minimum rates are introduced on time.
Where above award rates are currently being paid, employers must determine whether these rates will absorb the increase. If not, the wage rates must be increased to meet the new minimum standards.
For some employers, the transitional provisions which continue to run until 2014 will lead to a change in percentage pay rates on 1 July 2012. Where a transitional instrument is in place, employers must consider both the increased pay rates announced by Fair Work Australia and the change in percentage pay rates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
