Publications / Work Health and Safety

28 Jun 12
Minimum wage decision rejects carbon tax discount - mining awards varied to reflect decision

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The annual wage review decision by Fair Work Australia (FWA) on Friday 1 June 2012 has increased minimum award wages by 2.9%.  This decision lifts the federal weekly minimum wage by $17.10 to $606.40 (up from $589.30) and the hourly rate by 45c to $15.96 (from $15.51). 

The increase will take effect on 1 July 2012, with FWA rejecting all employer arguments for delays to, or exemptions, from the 2.9% rise.  The FWA panel also rejected that any compensation should be payable to employers for any cost increases associated with the carbon tax or that this year’s increase should be discounted for the carbon price compensation package. 

Whilst the Australian Chamber of Commerce and Industry (ACCI) argued that there should be an exemption from any increase in modern awards in designated service industries that were in significant difficulty, the panel were not satisfied that they had established exceptional circumstances warranting the grant of this exemption.  This included the lack of any obvious mechanism to properly identify the employers affected and to whom the deferral should apply. 

In considering the overall economic situation, the panel said that, ‘the economic outlook remained sound, with growth continuing around trend levels in aggregate, with continuing relatively low unemployment and moderate inflation.’  However they did consider that caution should be taken as a result of the uneven outlook for growth, with the resources section driving domestic growth and the non-resources sector growing less strongly.  This uneven outlook for growth and the inability to form a clear view of the current and prospective economic performance were significant factors in the panel’s determination of the level of increase in minimum wages with the panel calling the 2.9% increase ‘well balanced.’

With the panel rejecting numerous arguments for exemptions and deferrals to the wage increase, it is unsurprising that a wide range of employers will be affected by the increase, with most having to increase the wages of award-reliant employees by 1 July 2012.

Relevant Awards that are being varied include the Black Coal Mining Industry Award 2010 (BCA Award) and the Coal Export Terminals Award 2010 (CET Award) which have both already seen successful applications to vary the Award rates by 2.9% to reflect the 1 June decision. 

Increases to high income threshold

In handing down the minimum wage decision FWA also turned its attention to the high income threshold in unfair dismissal cases by increasing the threshold to $123,300.  For dismissals occurring on or after 1 July 2012 it is important to take note that any compensation awarded will be capped at a maximum of $61,650.  This amount is capped at either half the high income threshold, or 6 months of the dismissed employee’s wage, whichever is less. 

The effect of this increase is that employees who earn more than the threshold, and who are not covered by an award or an enterprise bargaining agreement, are precluded from making an unfair dismissal claim.  This amount increases from $118,100 for the previous financial year. 

If you have any queries about any aspect of this Focus, feel free to contact a member of our Workplace Relations and Safety team.

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