The Fair Work Commission (FWC) undertakes the National Wage Case each year to determine if, and to what level the minimum wage should be increased. Today the FWC handed down the decision (https://www.fwc.gov.au/awards-agreements/minimum-wages-conditions/annual-wage-reviews/annual-wage-review-2019-20 and https://www.fwc.gov.au/documents/wage-reviews/2019-20/decisions/2020fwcfb3500.pdf) that the minimum wage will be increased by from the first pay period on or after the 1st July 2020. This will have an impact on the base rate in all Modern Awards, though in a first, the impact will be staggered, with not all employees getting the rise on 1st July 2020.
The Decision will have a flow on effect to all of the Modern Awards and will result in increases in the base rates that are applicable in all Awards. In the coming weeks the FWC will release Draft and then Final Determinations for each of the Awards.
National Wage Case
The National Wage Case decision that has been handed down resulted in the minimum wage increasing 1.75%, a week to $19.84 per hour.
The 1.75% increase is lower than CPI (2.2%) and represents the first split decision since 1997, with the newest panel member, Professor Mark Wooden, dissenting in favor of a wage freeze rather than the increase that was announced today.
In handing down this Decision the Commission acknowledged the unprecedented impact of COVID-19 and the response measures and argued that this impacted “weighed in favor of moderation”.
Further, for the first time the increase will not be universally applied, nor will it be defferred unilaterally, as was requested by employer bodies. Rather, the new increase will commence on three different dates and apply to different groups of workers for each of these commencement dates.
The rationale behind the changing dates was that for those workers who have continued to work throughout the pandemic, the businesses have suffered less of an impact and can bear the increase commencing on 1/7/2020, whereas other more effected businesses, like construction should commence on 1/11/2020 and the most effected businesses, like tourism should commence on 1/2/2021.
In the fuel industry the implication of this staggered implementation will be;
- Group 1 – increase applicable from 1/7/2020
- No fuel industry specific Awards included in this group
- No fuel industry specific Awards included in this group
- Group 2 – increase applicable from 1/11/2020
- Clerks – Private Sector Award 2010
- Road Transport and Distribution Award 2010
- Group 3 – increase applicable from 1/2/2021
- Vehicle Repair, Service and Retail Award 2010
This Decision has a clear flow-on effect to the wage rates in all Modern Awards and thus requires all employers to review their employment instruments before the new rates come into effect.
Each year, the FWC reviews the cost of living, economy-wide productivity indicators and the general health of the Australian economy to determine if the minimum wage rates set in the Awards are commensurate with a living wage. While not all National Wage Cases result in an increase in the minimum wage, most do.
The 1.75% increase for the 2020/2021 year is significantly lower than the 4% increase sought by employee groups, but represents a significant increase on the 0%, or fully defferred until 1/1/2021, sought by employer groups.
|Year||Minimum Wage Per Hour||% increase over previous year|
|2009||$14.31||0.00% – NO CHANGE|
The delayed Decision, and the unusual nature of the staggered application of the rates based on employment groups is in itself unprecedented. The Determinations that will actually vary the rates in the Awards, will be released later today and will be finalized late next week.
ACAPMA Employment Quick Reference Guides
It is important for business operators to remember that the National Wage Case sets the Minimum Wage, but that the rates that must be provided to those working in the downstream petroleum industry will be changed by the FWC making formal amendments to the Awards, and that these changes are not always a simple increase by the standard percentage, especially for casuals in the retail sector. So while we know today the new National Minimum Wage, we will have to wait for the final determinations to vary the Awards before we have the final rates that will apply for 2020/2021 financial year.
ACAPMA is eagerly anticipating the release of the draft and then final determinations from the FWC, which are typically released around the third week of June. These determinations will translate this minimum wage decision into changes to the Modern Awards. ACAPMA is ready to prepare and circulate the ACAPMA Quick Reference Guides to ACAPMA Members.
ACAPMA’s employment department produces Quick Reference Guides each year, to summarise key Award requirements, including finalised rates for:
• The Road Transport and Distribution Award 2010 for fuel tanker drivers,
• The Vehicle Repair Services and Retail Award 2010 for console operators, roadhouse and driveway attendants, and
• The Clerks Private Sector Award 2010 for clerical staff.
All employment instruments effected
While the National Wage Case directly changes the wage rates in the Modern Awards there is also a flow on effect to all employment instruments.
Employers who use direct contracts, enterprise agreements, individual flexibility agreements or racked rates must take the time to review the wage rates contained within those instruments as the National Employment Standards, which apply to all employees, provide for the Modern Award rates to be the basis for all wage rates, regardless of instrument.
All employers need to review the base rates in their instruments to ensure they are equal to, or above the levels set in, the Modern Awards after the National Wage Case increase.
Register now so you don’t miss out
The ACAPMA Quick Reference Guides will be sent to the Principle members upon their release; however, all members are encouraged to have the responsible persons in their business, such as payroll or workplace relations managers, register to receive these Guides on their release, to ensure they receive the information in a timely fashion.
To register to receive the ACAPMA Quick Reference Guides and other key workplace relations information please email firstname.lastname@example.org to add key staff to the Employment distribution list.
Elisha Radwanowski BCom(HRM&IR)