Have you budgeted for minimum wage increases?

by Stephanie Zillman30 May 2012

The 2012 annual wage review is currently underway, and the decision on changes to modern awards is likely to be announced in early June – any changes to minimum wages will be effective from 1 July 2012.

The minimum wages received by employees in the national workplace relations system are reviewed by Fair Work Australia each year, and any adjustments must be reflected in the first pay period on or after 1 July.

The review board will be considering the rates of pay in:

  • modern awards – from 1 January 2010 these have specified the minimum wage rates for employees covered by a relevant modern award (subject to any transitional provisions)
     
  • The national minimum wage – this applies to award and agreement-free employees.

Each year the review board invites stakeholders to make submissions. The Australian Chamber of Commerce and Industry (ACCI) has submitted that no more than a $9.40 per week increase is implemented in minimum award wages, and there should be specific exclusions for those industry sectors adversely affected by the current economic circumstances – namely the manufacturing and retail sectors. ACCI’s submission to FWA noted that low inflation and increased business costs are having serious effects on business and the ability to stay competitive in Australia.

Yet the Australian Council of Trade Unions (ACTU) is seeking a $26 per week increase for the lowest paid workers and an increase of 3.8% for employees above the C10 classification level. “This increase is necessary in order to preserve, and modestly improve, the relative living standards of workers who rely on minimum wages,” the ACTU stated. The ACCI responded to the ACTU, saying that low inflation, the high dollar, imminent business cost rises and weakness in the slower lanes of the multi-speed economy mean the ACTU’s $26 per week wage claim is unfeasible.

There are significant penalties for deliberate underpayment of wages and under no circumstances can employers and employees agree to a rate of pay which is less than the applicable minimum wage. Employees may also be entitled to other allowances or loadings, depending on the job they do (e.g. a casual employee may be entitled to a casual loading) – these rates may also be affected by the annual wage review.

The minimum wage increased last year by $19.90 a week to just over $607, and at this stage there is no certainty as to the outcome of the minimum wage decision for 2012.

More to come.

 

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