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6 Jun 17
Annual wage review decision - 3.3% increase

WHO SHOULD READ THIS

  • All employers covered by a modern award or with employees paid based on the national minimum wage (NMW).

THINGS YOU NEED TO KNOW

  • The Fair Work Commission (FWC) has increased the NMW and modern award minimum rates by 3.3%.

WHAT YOU NEED TO DO

  • Review rates of pay for affected employees to ensure compliance.

The Fair Work Commission’s Expert Panel (Panel) handed down its Annual Wage Review 2016–17 decision this morning.  This decision granted a 3.3% pay increase to Australia’s minimum wage reliant and modern award covered employees, to commence from 1 July 2017.

Decision
The Panel’s decision will affect the estimated 2.3 million employees reliant on minimum rates of pay.

In arriving at their decision, the Panel said the 3.3% increase ‘will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment.’

From 1 July 2017, the NMW will be $694.90 per week, or $18.29 per hour.  This constitutes an increase of $22.20 per week to the weekly rate or $0.59 per hour to the hourly rate. 

In its statement the Panel also noted that international research suggests that the Panel’s past assessment of what constitutes a ‘modest’ increase may have been overly cautious, in terms of its assessed disemployment effects.

This runs contrary to a submission made by the Federal Government to the Panel that economists ‘generally agree that excessive minimum wage increases will reduce employment, including hours worked.’

It is also a marked increase above the latest data from the Australian Bureau of Statistics which shows for the year to the March Quarter 2017, the Consumer Price Index growth was at 2.1%, and annual wages growth was at 1.9% (1.8% in the private sector and 2.4% in the public sector).

What to do
The decision to increase minimum rates of pay, including under modern awards, means that all employees currently reliant on minimum wages will receive a pay rise from 1 July 2017.  Employers covered by modern awards or with employees receiving payments based on the NMW will need to review their arrangements to ensure that employees are paid correctly.

Employers covered by an enterprise agreement will need to make sure that the base rate of pay^ under their enterprise agreement is not less than the base rate of pay that would be payable under the relevant modern award.

The increase will also affect applications for approval of an enterprise agreement currently before the FWC when it considers whether the agreement passes the better off overall test.  Agreements currently before the FWC may require undertakings before they can be approved to ensure that employees that would be covered by the agreement receive a base rate of pay that is not less than the base rate of pay that would be payable under the relevant modern award.



Focus covers legal and technical issues in a general way.  It is not designed to express opinions on specific cases.  Focus is intended for information purposes only and should not be regarded as legal advice.  Further advice should be obtained before taking action on any issue dealt with in this publication.

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