Fair Work Commission decides on increase to Award Rates and the Federal Minimum Wage

What’s changing?

  • The Fair Work Commission has determined that the rates of pay in Modern Awards and the Federal Minimum Wage (FMW) will be increased by 3.3%.
  • The new FMW will increase to $18.29 per hour which equates to an additional $22.42 per week for full time employees.

Who is affected?

  • Employees who are covered by Modern Awards.
  • Employees who are paid at the minimum wage.
  • If you have an Enterprise Agreement which links wage increases to the minimum wage decision then you may be affected. The effect of the decision will vary in accordance with the particular terms of an Enterprise Agreement, so we recommend that you seek tailored advice.

When does this change take effect?

  • The change will come into force from the first full pay period on or after 1 July 2017.

What should I do?

  • (Check your rates) Check your existing rates of pay. Updated information will be available through the Fair Work Commission and the Fair Work Ombudsman’s pay calculator or pay guides; new information should be available as the date of the change approaches, so check back regularly.
  • (Paying above the minimum?) Even if you are paying above the new minimum rates, it is important to re-check the rates and ensure that your employment contracts have a ‘set-off’ clause to confirm that the ‘over award’ amount will account for other award entitlements (e.g. penalty and overtime rates).
  • (Increase to allowances) Many allowances in the Modern Awards will also increase as they are calculated as a percentage of a specific wage rate.
  • (Review base rates of pay in Enterprise Agreements) Even if your employees are covered by an Enterprise Agreement, you need to ensure that the base wage rates for each classification level under your agreement are at least equal to the base wage rate for the equivalent classification levels under the applicable Modern Award.

Timetable finalised for penalty rates increase

Background

The Fair Work Commission recently determined that Sunday penalty rates and public holiday rates should be reduced under the following Modern Awards:

  • Restaurant Industry Award 2010 (public holidays only);
  • General Retail Industry Award 2010;
  • Hospitality Industry (General) Award 2010;
  • Fast Food Industry Award 2010; and
  • Pharmacy Industry Award 2010.

Public holidays

As we reported previously, the change to public holiday rates will come into effect in full on 1 July 2017. The new public holiday penalty rates are as follows under all Awards listed above:

  • Full-time and part-time employees – 225%
  • Casual employees (including 25% loading) – 250%

Sunday

The changes to Sunday penalty rates will be introduced incrementally over:

  • 3 financial years for the Restaurant Award, Hospitality Award and Fast Food Award; and
  • 4 financial years for the Retail Award and Pharmacy Award.

We have created a printable table containing full details of the transitional arrangements for your ease of reference – click here.

Attempts to circumvent the decision

Unions were unsuccessful in attempting to circumvent the decision:

  • (No Take Home Pay Orders) The FWC noted that ‘take home pay orders’ (which can preserve an employee’s income) are not available to affected employees. These orders are only for reductions that were caused by the initial introduction of the Modern Awards, not variations to Modern Awards.
  • (No ‘red circling’ or delays in implementing the change) A proposal for maintaining the status quo for current employees by only implementing the decision for employees engaged after the date of the decision was rejected along with submissions that the decision should be delayed.

Potential future developments

The FWC’s decision is currently subject to an appeal in the Federal Court and there is also a Bill before the Federal Parliament which seeks to preserve penalty rates, effectively reversing the decision. We will keep you posted on any new developments.

If you have any queries or would like further information regarding this article, please contact:

David Dilger
Partner
M: 0428 238 819
E: ddilger@pageseager.com.au

David Hodgson
Senior Associate
M: 0417 305 800
E: dhodgson@pageseager.com.au

Barney Adams
Lawyer
T: (03) 6235 5917
E: badams@pageseager.com.au

Published: 16 June 2017

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