Fair Work Commission increases award rates of pay by 5.75 per cent
ANNUAL WAGE REVIEW DECISION
The Fair Work Commission has decided that award rates of pay will be increased by 5.75 per cent effective from 1 July 2023.
2 June 2023
The Fair Work Commission has today handed down its annual wage review decision.
The Commission has decided to increase the minimum wages in all modern awards by 5.75%. These increases will take effect from the first full pay period commencing on or after 1 July 2023.
The National Minimum Wage has also been increased from $21.38 per hour to $23.23, an increase of 8.65%.
The Commission also indicated that it will soon commence work to address what it identified as significant issues concerning the potential gender undervaluation of work in modern award minimum wage rates applying to female-dominated industries and occupations.
SIZE OF THE INCREASE
The decision awards workers the highest increase in decades and is naturally influenced by the unique inflationary environment currently facing businesses and workers.
Business NSW and Australian Business Industrial urged the Commission to implement a more moderate increase of 3.5% for the 2023 year, however, the Commission ultimately landed on the higher figure that will now be applied.
The Commission acknowledged that the Superannuation Guarantee contributions rate is also set to rise to 11% from 1 July 2023 and indicated that this had had a moderating impact on their decision.
CHANGES TO MODERN AWARDS
The minimum wages in all modern awards will be increased by 5.75%. These increases will take effect from the first full pay period commencing on or after 1 July 2023 for all modern awards. This represents a departure from previous years where the Commission has staggered the implementation of the increases in response to the COVID-19 pandemic.
CHANGES TO THE NATIONAL MINIMUM WAGE
The Commission took a two-step approach to the National Minimum Wage.
The National Minimum Wage has traditionally been linked to what is known as the C14 wage level – an introductory/training wage contained in certain modern awards. The Commission determined that this was no longer appropriate and indicated that the minimum wage should instead be alligned to the C13 wage level, which is the lowest classification rate applicable to ongoing employment in most modern awards.
The Commission decided that, in addition to the change in alignment, the National Minimum Wage should also be increased by 5.75%.
When combined, the change in alignment and the 5.75% increase result in the National Minimum Wage increasing from $812.60 per week or $21.38 per hour to $882.80 per week or $23.23 per hour, a combined increase of more than 8.6%.
Casual award/ agreement free employees are also covered by a default casual loading which remains at 25%.
GENDER EQUALITY ISSUES
The Commission also stated that the scope and timing of the present review had prevented it from addressing what it considered to be significant issues concerning the potential gender undervaluation of work in modern award minimum wage rates applying to female-dominated industries and occupations.
It announced that it will soon commence a research project to identify occupations and industries that may be subject to such undervaluation, and that this project will be used to underpin future proceedings.
While no further specific details were announced, the Commission put all parties on notice that “the timely resolution of these gender equality issues is firmly on the Commission’s agenda”.
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 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 is no lower than the increased relevant modern award rates of pay, particularly if the agreement was made several years ago.
WHEN WILL THE CHANGES COME INTO EFFECT?
*The changes come into operation from the first full pay period on or after 1 July 2023.
To view the Commission’s decision click here. A summary of the decision is also available here.
FURTHER INFORMATION
Online awards will be updated with the new rates progressively over the next few weeks. These will be available here.
Please call the Workplace Advice Unit on 13 29 59 or email [email protected].au if you wish to discuss this circular or require further information
