Every year, The Fair Work Commission (FWC) reviews the minimum wages outlined in the modern awards as well as the national minimum wage for employees who are not currently covered by an award or enterprise agreement.
The Fair Work Commission has announced a 2.5% increase to minimum wages. The increase will begin from the first full pay period starting on or after 1 July 2015.
The increase will only apply to employees that get their tax rates from the national minimum wage, a modern award or a registered agreement in some cases.
The new minimum wage will be $656.90 per week or $17.29 per hour. The national minimum wage is applied to employees who aren’t covered by an award or agreement. However, most employees are covered by an award. Award rates will be increased by 2.5%.
It is important for employers covered by an enterprise agreement to be conscious of their requirements relating to minimum pay rates because of the Annual Wage Review decision.
Section 206 of the Fair Work Act 2009 demands that the base rate of pay in an enterprise agreement must be at least equal to the appropriate modern award rate. If the enterprise agreement rates are less than those required under the relevant modern award, the agreement operates as if its base rates were equal to those under the modern award.
Employers could be at risk of underpayment claims if their enterprise agreement caters for annual wage increases that are less than the increases applied to the modern award rates in accordance with the annual wage review decision. This can particularly be an issue if the current pay rates under the enterprise agreement are equal to, or only marginally above, the applicable modern award base rates.
If employees are being paid a blended rate, comprehensive of some or all allowances, employers should ensure that the base rate is at least equal to or higher than the applicable modern award rate. This can cause problems in some cases where it is difficult to distinguish from the allowances included in the blended rate.
Employers who pay their employees an annual salary or wage must also be sure that their employees’ salaries are equal to, or higher than the payment that the employee would be entitled to for the hours they regularly work under an appropriate enterprise agreement or modern award.