Jonathon Corlett and Rebecca Brediceanu

‘Robust’ business conditions bring about 3.5% minimum wage increase

Jonathon Corlett and Rebecca Brediceanu

1 June 2018

Award Conditions Employment Contracts

The Fair Work Commission (FWC), in its annual wage review, has decided to increase all award minimum rates of pay by 3.5% from 1 July 2018.  The new national minimum weekly wage will be $719.20.

Some takeaways from the FWC’s decision include:

  • the labour market has improved significantly – full time employment, hours worked and general employment growth have all exceeded 3%. Recent employment growth has exceeded population growth – the age-adjusted participation rate is as a record high of 66.7%;
  • the FWC considered the gender pay gap in Australia (which ranges from 11.0% to 15.3% depending on the method of calculation) as a factor in the decision to award a greater increase to the minimum wage than in the past few years. The change is intended to promote social inclusion through workforce participation and address the historical undervaluation of female work and female-dominated workplaces; and
  • business conditions in Australia are described as ‘robust’ – profits grew by 4.3% in 2017, and 5.8% in the non-mining sector. GDP growth is forecast to be strong over the coming year.

What does this mean for employers?

First and foremost, employers need to make sure that – from 1 July 2018 – they pay their employees at least in accordance with the new minimum wage rates. Over the next month, the FWC will make formal orders to increase each award’s rates of pay.  Those orders will be accessible from the FWC website.

An annual audit in the lead up to each new financial year may be useful for employers to review their employment practices and ensure that they are complying with their statutory obligations, including any applicable awards. A failure to comply with statutory obligations or awards can have serious financial and reputational consequences.

An audit extending to employment contracts can identify a need for better protection of confidential information, relationships and goodwill. Remember that any change to employment contracts must be clearly communicated and agreed and supported by valuable consideration, such as a wage increase or one-off benefit.

If you would like us to review your employment contracts and award compliance, or seek further information about the FWC’s decision, please contact a member of our Employment and Safety team.