1.5 Million Of Australia’s lowest paid workers will have a pay increase of 3% by July of this year. For a full-time employee working a 38-hour week the increase is $18.70 per week (50 cents per hour) to $640.90 per week, or $16.87 per hour.
FWC President Justice Iain Ross announced the decision, noting that the increase in super guarantee from 1 July had a moderating impact.
The ACTU had originally asked for a $27 per week, or 4.3% increase but the Federal Government warned that increases that high would lead to a loss of jobs as some businesses would not find this affordable.
Ai Group had proposed a 1.6% or $10 per week increase, with ACCI’s proposal even more conservative at 1.3%.
The panel suggested that it would not be as low if the superannuation guarantee rate was not also due to rise in July.
The Fair Work Commission last month ruled to limit Sunday penalty rates for some restaurant and cafe staff from July, expected to save businesses up to $112 million a year.
What this means for you
Modern Awards
Businesses that apply Modern Award rates will have to increase them to comply with the FWC decision. From 1 July 2014 all wage rates and penalties will need to match the applicable Modern Award.
Annualised Salaries and Individual Flexibility Agreements
if your business has utilised Individual Flexibility Agreements, you will have to review those agreements to guarantee employees are still “better off overall” when compared to the increased modern Awards rates.
Employers who use annualised salary arrangements under Modern Awards should also check the Award requirements.
Enterprise Agreements
if you are currently negotiating an Enterprise Agreement or if you already have one, you should consider the increase to ensure that the rates that are negotiated are enough to pass the Better off Overall Test.
If you have an Enterprise Agreement, you will need to ensure the minimum base rates in the EA remain at least equal to the new Modern Award rates.
Allowances
The Fair Work Commission‚Äôs decision will impact allowances as well as base rates. A number of Modern Award allowances are expressed as a percentage of the “standard rate”, which is the rate applicable to the trade‚Äôs equivalent classification in the award. These allowances will therefore increase in line with the increase in the standard rate. Expense related allowances will increase in line with the relevant CPI index.
High Income Guarantee
the High Income Threshold will also increase from 1 July. Any employers who avoid Award conditions by using High Income Guarantees to will need to examine their agreed terms to remain compliant and above the new threshold. If guarantee levels fall below the threshold minimum entitlements will revert to those in the Award (including, for example, overtime and penalty rates).
Employers will have to identify and implement any changes promptly to ensure compliance to the Fair Work Commission’s decision.