The Fair Work Commission has handed down its decision in the 2021/2022 annual wage review. This decision increases both the national minimum wage and the minimum wages payable to modern award covered employees.
Summary of Decision
- The national minimum wage will be increased by 5.2%, taking it to $812.60 per week or $21.38 per hour.
- Minimum wages in modern awards will be increased by either:
- $40 per week (where the current minimum wage is $869.60 per week or less); or
- 4.6% (where the current minimum wage is greater than $869.60 per week).
- The increases will apply in two stages with the rates in most modern awards increasing from 1 July 2022.
- The increases to minimum wages in some modern awards will be deferred until 1 October 2022.
- The national minimum wages for award-free juniors, employees under training arrangements, and employees with a disability have also been increased by 5.2%.
Two-tiered approach to modern award covered employees
In recent years the Commission has elected to increase modern award wages by a fixed percentage, consistent with the increase applied to the national minimum wage. The 2021/2022 decision departs from this practice, instead applying a two-tier increase.
Modern award wages that are currently fixed at $869.60 per week or less will receive a $40 per week increase. This is equivalent to a percentage increase of between 4.6% and 5.2%.
Modern award wages that are currently above $869.60 per week will receive a 4.6% increase.
In most modern awards, the $40 flat rate increase will apply to all levels below the C10 or trade level classification.
The Commission’s approach provides a proportionately higher increase to low-paid employees, addressing what they saw as a need to afford a greater level of support to the low paid while seeking to constrain inflationary pressures. The Commission acknowledged that the increases will mean a real wage cut for some award-reliant employees but noted that this can be addressed in subsequent annual wage reviews.
The increases will flow through to junior employees, employees to whom training arrangements apply in modern awards (including the rates under the National Training Wage Schedule), employees with a disability and piece rates.
As in recent years, the Commission has announced staggered effective dates in recognition of the fact that certain industry sectors are still recovering from disruptions caused by the COVID-19 pandemic.
While minimum wages in the majority of modern awards will increase from 1 July 2022, increases to minimum wages in the following awards will be deferred until 1 October 2022:
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Air Pilots Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Alpine Resorts Award 2020
- Hospitality Industry (General) Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Registered and Licensed Clubs Award 2020
- Restaurant Industry Award 2020.
Award/agreement free employees - Minimum wages
Award/agreement free adult employees are covered by the national minimum wage. This will be increased by $40 per week to $812.60 (or $21.38 per hour) from 1 July 2022.
Casual award/agreement free employees are also covered by a default casual loading which remains at 25%.
The increase will flow to award/agreement free junior employees and employees to whom training arrangements apply. These wages will continue to be set by reference to the Miscellaneous Award 2020.
The increase will also flow to award/agreement free employees with a disability. Where the disability affects their productivity, these employees will continue to be paid in accordance with an assessment under the Supported Wage System Schedule. The minimum weekly payment for these employees (currently $90) was not increased as part of the annual wage review but is expected to be reviewed prior to 1 July 2022.
What do I need to do?
Employers should ensure that employees who are paid in accordance with a modern award or the national minimum wage receive the appropriate pay increase by the relevant effective date.
Employers who do not pay strictly in accordance with award terms (e.g. those that pay above award rates, annualised salaries or ‘flat rates’ of pay) should ensure that their payments will still satisfy all of their obligations under the relevant award/minimum wage once the increases apply.
Employers who pay in accordance with an enterprise agreement should ensure that the base rates of pay under the agreement are no lower than the increased modern award rates of pay, particularly if the agreement was made a number of years ago.
If you are a member of Business NSW the Workplace Advice Line can answer your questions on award provisions, wage rates and interpretation - just call 13 29 59.
As always, businesses can contact ABLA’s Workplace and Employment team on 1300 565 846 if they require any assistance in understanding or applying the Commission’s decision.