From 1 July, Australians will begin to experience an increase to the minimum wage. This increase will commence in a staggered approach, with essential services being the first group to benefit. It is estimated that one-quarter of the Australian workforce will benefit from this increase. We know that it can be hard to stay up to date with adjustments to the Fair Work Act. Like with any new changes to employment law, you most likely have unanswered questions. To help you on your way, we’ve put together a list of common questions and answers surrounding the increases to the minimum wage. Read on to find out if your business is affected and if you are, how to prepare yourself come 1 July. Please note: This information is general in nature and is not considered professional legal advice. For legal advice relating specifically to your situation, please get in touch withEmployment Innovationswho can assist you further.
What is the current minimum wage?
As of 22 June 2020, the minimum wage is $740.80 per week. This equates to a minimum hourly rate of $19.49 before tax.
What will the minimum wage increase to?
The Fair Work Commission has announced an increase of 1.75% to the minimum wage. This will mean that workers receiving the minimum wage will now earn $753.80 a week, or $19.84 per hour. This is an increase of $13.00 a week or 0.35c per hour. This is a compromise for both the federal government (who opposed any increase) and the union movement (who called for a 4% increase). In regards to Australian Council of Trade Unions (ACTU’s) suggested increase, Fair Work Commission President Iain Ross stated, “in the present economic circumstances, awarding an increase of the size proposed by the ACTU would pose a real risk of disemployment, and of adversely affecting the employment opportunities of the low-skilled and young workers.” Unlike previous changes to the minimum wage, this change won’t apply to all businesses from 1 July. It will apply to different industries in a three-stage approach over a period of eight months.
When will the minimum wage increase commence?
The commencement of increases to the minimum wage will begin from 1 July 2020. The new minimum wage will be introduced using phases to allow industries heavily affected by COVID-19, such as tourism and entertainment,to recover first. From 1 July 2020, those in the essential services and healthcare industries are entitled to the new minimum wage rate. The second phase will cover works in industries including manufacturing and construction from 1 November 2020, with the final phase wage coming into effect in February 2021.
What industries will receive an increase to the minimum wage?
From July 1 2020, frontline workers will receive an increase to their wage. This includes:
- Frontline health care and social assistance workers
- Teaching and child care
- Other essential services
From November 1 2020, most industries will receive the increase. This includes sectors from:
- Most other industries
From February 1, 2021, the hardest-hit industries from COVID-19 will receive the 1.75% increase. These industries include:
- Arts and recreation
- Hospitality Industry (General) Award
For a full list of the industries and introduction dates, please visit the Fair Work Ombudsman website.
Will the changes to the minimum wage apply to those on junior rates?
Yes, for those under the age of 21, they will receive a percentage of the increased rate. If you have staff on junior rates, the minimum wage will be determined by the employees age. If you are unsure of the new minimum wage rates for junior employees, you can use the Fair Work Pay Calculator.
Who will be entitled to the minimum wage?
Employees who work in industries covered by an award or registered agreement are entitled to the increased minimum wage rates. This includes penalty rates and allowances in their award or agreement. As per the Fair Work Ombudsman, these pay rates may be higher than the National Minimum Wage.
Does this apply to me?
If you’re covered by a registered agreement, visit the Fair Work Ombudsman website to see if the increase affects you and your employees. If you’re an employer paying above the new minimum wage, the increase will not apply to you and your employees.
The wrap up
From July 1 2020, the Australian minimum wage will increase by 1.75% or $13 per week for essential services. This increase will continue through to a range of other industries on November 1 2020 and February 1 2021. To find more information about the changes and when the changes come into effect, visit the Fair Work Ombudsman website.
Want more information?
For a full list of which awards fall into which category, click here. If you are already using Employment Hero Payroll, these updates will be available in the platform in the near future. Stay tuned for further details or get in touch with one our small business specialists to learn more. If you’re looking for more information on how to stay compliant, we’ve created an HR Compliance Essentials Bundle to help you stay on the right side of the law. In this bundle, you’ll find policies, templates and guides to help you stay compliant.