New rate realigned to different classification, resulting in one-off higher increase
The Fair Work Commission (FWC) has approved a 5.75-per-cent increase in all award rates and an increase to the national minimum wage (NMW) from $812.60 to $882.80 a week, and from $21.38 to $23.23 an hour.
In approving the increase, FWC president Justice Adam Hatcher said, “Because of the negligible proportion of the workforce to which the national minimum wage applies, this outcome will not have discernible macroeconomic effects.” He said he was “confident that the increase we have determined will make only a modest contribution to total wages growth in 2023-2024, and will consequently not cause or contribute to any wage-price spiral… However, the level of wage increase we have determined is, we consider, the most that can reasonably be justified in the current economic circumstance.”
The increases came into effect on 1 July 2023.
FWC has also realigned the NMW rate to the C13 classification wage rate in modern awards, which is slightly higher than the C14 rate which previously applied, but which the FWC has now deemed too low and as no longer constituting a proper minimum wage safety net. In doing so, it is worth noting that the 5.75-per-cent increase applies to the new C13 classification wage rate, as opposed to the lower C14 rate, which effects an 8.6 per cent increase. Hence, there is this year a one-off higher increase.
A previous minimum wage increase prompted warnings of job losses.
What does it mean for employers?
The FWC’s decision means that:
- Employers who pay their employees at minimum wage rates pursuant to the NMW or modern awards will be required to increase their employees’ rates of pay from 1 July 2023.
- Employers who pay their employees under an industrial instrument, such as an enterprise agreement, should review the rates under that instrument to ensure that they are equal to or above the applicable minimum wage rates.
- Employers who pay their employees above the minimum wage rates and utilise set-off clauses or annualised wage arrangements should review and assess the impact of the minimum wage increases. In particular, they should assess whether under those arrangements increases may be able to be absorbed without making any changes or whether increases or adjustments to remuneration arrangements may be necessary.
In assessing the impact of the minimum wage increase, and in reviewing remuneration arrangements more broadly, employers should also be mindful that the superannuation guarantee percentage will increase to 11 per cent from 1 July 2023.
Melinda Bell is an employment and labour lawyer at Norton Rose Fulbright in Melbourne.
The eligibility for Age Pension has also increased to 67 years.
