Annual Wage Review Decision 20/21

The Fair Work Commission has handed down its decision in the 2020/2021 annual wage review. This decision increases the minimum rates payable to both modern award covered and award free employees.

Summary of Decision

• Minimum wages in modern awards will be increased by 2.5%.
• The increases will apply in three stages with the rates in most modern awards increasing from the first full pay period commencing on or after 1 July 2021.
• The increases in some awards will be deferred to the first full pay period commencing on or after 1 September 2021 or 1 November 2021.
• The 2.5% increase will also apply to the national minimum wage, raising it by $18.80 to $772.60 per week, or $20.33 per hour.
• The national minimum wages for juniors, employees under training arrangements, and employees with a disability have also been increased by 2.5%. 

Modern award covered employees - Minimum wages

The minimum rates of pay for adult employees covered by a modern award are to be increased by 2.5%. The weekly wages will be rounded to the nearest $0.10. 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.

Effective dates

Due to the impacts of COVID-19, the increases awarded in last year’s annual wage review were deferred for the majority of modern awards. The minimum wage increases in these awards took effect in either November 2020 or February 2021.

The Commission has again decided to stagger the award wage increases, albeit to a lesser extent. The minimum wages will increase in all modern awards from the first full pay period commencing on or after 1 July 2021, with the exception of:
- the General Retail Industry Award 2020, where the increase will come into effect from 1 September 2021; and 

- the following modern awards, where the increase will come into effect from 1 November 2021;

Award/agreement free employees - Minimum wages

Award/agreement free adult employees are covered by the national minimum wage. This will be increased by $18.80 to $772.60 per week (or $20.33 per hour) from the first full pay period on or after 1 July 2021.

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 effects 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 $89) was not increased as part of the annual wage review but is expected to be reviewed prior to 1 July 2021.

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.