Annual Wage review - Fair Work Commission decides on 5.75 % increase to the minimum wage.


On 2nd June, the Fair Work Commission (FWC) handed down its decision on the annual wage review. The decision provides an increase of 5.75% to Modern Award minimum wages for all classification levels, with those increases effective from the first full pay period commencing on or after 1 July 2023.

In reaching its decision, the FWC took into account the following considerations:
o rise in the cost of living;
o improvement in the labour market;
o high inflationary pressures;
o increases to superannuation contribution; (note - Superannuation Guarantee contributions rate will increase from 10.5 per cent to 11.0 per cent)
o gender equality considerations, with the increase predominantly affecting award-covered female workers, therefore reducing the aggregate gender pay gap

Explaining the decision the Commission had taken into account both economic and social conditions, in line with the full bench’s mandate.
The FWC outlined that :
• That only 0.7 per cent of employees are paid the national minimum wage (NMW);
• Approximately 20.5 per cent of employees are paid in accordance with minimum wage rates in modern awards.
• The Panel’s decision will therefore operate upon the wages of about a quarter of the Australian employee workforce
• The Panel also noted that the characteristics of the workforce which rely on modern award minimum wage rates and are directly affected by the Review decision, are significantly different to the workforce as a whole. They predominantly work part-time hours, are predominantly female, and almost half are casual employees. They are also much more likely to be low paid, paid junior rates, and work for a small business
• The Panel has placed significant weight on the impact of the current rate of inflation on modern award-reliant employees. The Panel found that the decline in real wages amongst the modern award-reliant has had significant adverse effects on the low paid, causing a decline in living standards, financial pressure on households and, for some household types, a likely incapacity to meet basic budgetary needs. Because of the make-up of the modern award-reliant cohort, these adverse effects of the high rate of inflation will have disproportionately affected female employees and employees in less secure employment
• The Panel also acknowledged that gender pay gaps remain a significant issue in the Australian labour market

The decision will lift the national minimum wage from $812.60 to $882.80 a week and from $21.38 to $23.23 an hour.

Employers should undertake the following steps:
o review minimum rates of pay, terms and conditions for Award covered employees and process increases from the first full pay period in July if necessary;
o review the salary of Award covered employees to ensure that the salary continues to result in the employee being better off as compared to what the employee would have received under the Award;
o review the base rates of pay provided under any enterprise agreement to ensure that the base rate of pay is at least equivalent to the updated base rate of pay under the Award; and
o engage and inform team members who will be undoubtedly receiving information from the media.

In the event you are covered by an enterprise agreement, it is important to ensure that the base rates in those agreements remain at least equal to the new minimum Modern Award Rates.

The DAPA Platinum level membership provides you with industrial advice if you have any questions about the increase.
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