National Minimum Wage on the rise
From Craig Joy, Craig Joy Workplace Consulting
The new wage decision has been released, and a rise of 3.3% will apply to all Award minimum rates, with the National Minimum Wage rising to $694.90 for a 38 hour week, or $18.29 per hour for adult full-time employees.
The order to bring the rise into effect is not yet published, but usually operates from the “first full pay period on or after 1st July". “First full pay period” means that, for example, if a pay period commences in late June and ends in July, the rise will be effective from the next full pay period, not simply from the 1st of July.
The awards will be updated with the new rates and those should be available shortly, and and can be accessed at https://www.fwc.gov.au/awards-and-agreements/awards/modern-awards/modern-awards-list. You can also subscribe to a free email service which will advise you of changes to your Award/s via the link: https://www.fwc.gov.au/about-us/reports-publications/subscribe-updates
Once the Awards are updated, the front page of the Award will indicate a variation dated June 2017, and will provide a link to the previous pay tables. The pay tables will show “01Jul17” at the top. Updates of the various Awards will be done progressively over the coming weeks, so it is not possible to say which ones will be done when, but they should all be done by the end of June.
Remember, the Award will still have “2010” in its title on the front page – that’s the name of the document, not a reference to when it was updated. The Award will still have the same title (such as Clerk’s Private Sector Award 2010), because the pay rates change, not the title, so don’t go looking for the “2016 Award”. They will all continue to be called “2010 Awards” until their next review version is published. That started in 2014 but is not yet finished.
For those with Enterprise Agreements in place, if those adopt the national wage case decision, then the minimum rates under those Agreements need to be increased by 3.3%. Agreements which stipulate a set percentage increase in July will need to be adjusted by the relevant amount.
There is always confusion about what impact this decision has, and what employees are entitled to. It does not mean that employees are all entitled to a 2.4% pay increase, unless they are paid the minimum award amount, or their employment contract states that they get the national wage case increase. Otherwise, employees who are already paid above the new minimums are not actually entitled to a pay rise. I recommend that specific discussions be had with employees surrounding this issue, to ensure that they are aware of what they actually are (or are not) entitled to.
Exemption Rate and Unfair Dismissal Limit
The increase in the minimum wage also means an increase in the exemption rate for awards applying, and the income level for employees covered against Unfair Dismissal.
If an award-covered employee is guaranteed a level of income above the threshold, then they can enter a written agreement with their employer that the Award provisions will not apply. For the past year, the minimum level has been $138,900. The new amount is yet to be declared, but it is not a simple matter of adding on 3.3%. Still, it will be in the region of $143,400 per annum. This has to be guaranteed income, not bonuses or commission, and has to be in writing. An employee could earn significantly more than the threshold, but unless that level of income is guaranteed, it doesn’t count.
There is also a provision that “award-free” (including being free of Enterprise Agreements etc) employees who earn over the threshold amount are excluded from lodging unfair dismissal claims. In that case, it doesn’t have to be guaranteed income, just fact – if they earn above that level AND are award-free, then they are excluded from unfair dismissal claims to the Commission.
This does not exclude anyone who is “covered” by an Award or Agreement. Someone covered by an award or agreement could earn much more than the threshold amount, and is not excluded from unfair dismissal. Putting an employee under an agreement to eliminate the Award by virtue of their level of pay, does not disqualify them from unfair dismissal claims.
Penalty Rate Changes in Certain Awards
Following the announcement that weekend and public holiday penalty rates would be reduced in the hospitality, fast food, clubs, restaurants, retail, and pharmacy Awards, it has now been decided that the changes to weekend penalty rates will be phased in, but the changes to public holiday penalty rates will apply in full from this July.
Some Awards will have their weekend penalty rates phased in over two years, others over three years. In relation to the Fast Food Award, the changes only apply to employees at Level 1. So it is very much a case of reading your award for its particular vagaries.
As previously noted, the effect of this decision is restricted to these few awards, and it is highly unlikely that it will spread to other awards. There is also every likelihood that the decision will be appealed and it is also likely to be rescinded in the event of a change of federal government.
