In its annual wage review for 2020/21, the Fair Work Commission (FWC) has decided to increase the national minimum wage and all modern award rates of pay by 2.5%. The new national minimum weekly wage will be $772.60, equating to an hourly rate of $20.33.
As with last year’s COVID-19 affected wage review, the FWC has delayed the rate increases for sectors most negatively impacted by the coronavirus pandemic. While the national minimum wage and rates under most awards will increase effective 1 July 2021, the FWC has delayed the increase to modern awards covering the aviation, tourism, accommodation, food services, arts, recreation services and retail trade sectors to 1 November 2021, subject to some exceptions.
These exceptions are:
- rates in the Fast Food Industry Award 2010, the Horse and Greyhound Training Award 2020, the Commercial Sales Award 2020, the Vehicle Repair, Services and Retail Award 2020 and the Commercial Sales Award 2020 will increase on 1 July 2021 because of evidence that employers subject to those awards have generally fared better than others in their respective sectors; and
- rates in the General Retail Industry Award 2020 will increase on 1 September 2021 because of disparate impacts of the pandemic and related shut downs amongst employers covered by that award.
Some other takeaways from the FWC’s decision include:
- in deciding on a 2.5% increase, the FWC took into account the changes to the superannuation guarantee contribution rate, which will increase to 10% of ordinary time earnings from 1 July 2021;
- while there are clearly sectors that remain badly affected by the pandemic, there was a broad consensus that the economy’s performance had exceeded last year’s expectations and its recovery was well underway; and
- the FWC expressed concern that a lower level of increase had the potential to result in a real wage cut when inflation was taken into account for lower-paid employees paid award minimum rates.
What does this mean for employers?
It is important for employers to make sure that they pay their employees in accordance with the new minimum wage rates when they come into effect. In the lead up to 1 July 2021, the FWC will make formal orders to increase each award’s rates of pay. Those orders will be accessible from the 2020/21 annual wage review page on the FWC website.
Given the increased focus on award compliance in recent years, employers may also seek to take the opportunity to audit and review their employment practices to ensure that they are complying with all their statutory and award obligations, not just minimum wage rates.
If you would like us to review your organisation’s compliance with statutory and award obligations, or seek further information about the FWC’s decision, please contact a member of our Employment and Safety team.