Minimum Wage Increase by 2.5% Effective 1 July 2021

Following the Annual Wage Review 2021, the Fair Work Commission has announced a 2.5% increase to minimum wages. This will also apply to all award wages, with the award increase happening in 3 different stages.

Who does the increase apply to?

The increase applies to anyone who is paid minimum award wages or the national minimum wage. Most employees are covered by an award. For anyone not covered by an award or an agreement, the new national minimum wage will be $772.60 per week or $20.33 per hour.

When does the increase start?

The new national minimum wage will apply from the first full pay period on or after 1 July 2021. This means if you have a weekly pay period that starts on Mondays, the new rates will apply from Monday 5 July 2021.

The award increase will happen in 3 stages.

• On or after the first full pay period of 1 July 2021, such as fast food industry, commercial sales, construction, mining, and manufacturing awards will increase:
• The increase for the General Retail Industry Award will apply from the first full pay period on or after 1 September 2021.
• The other 21 awards will increase from the first full pay period on or after 1 November 2021. For further information and to find out who is affected, please speak to one of our HR experts.

The increase doesn’t affect employees who already get paid more than their new minimum wage.

Factors

As the COVID-19 pandemic continues to evolve throughout Australia, the decisions surrounding wage increases have been particularly complex. In making this decision, the FWC took into account economic and social considerations including:

• Relevant industry-specific data;
• The period of time between successive review increases; and
• The likelihood that future lockdowns will be of limited duration and localised; comprising of stay-at-home orders localised to particular regions with limited reasons for people to leave their home.

It also considered the various positions and submissions of the Australian Government, State Governments and interested parties, including employee associations, and employer associations.

Superannuation Changes

Effective 1 July 2021, there will be changes to the Superannuation Guarantee. This has now changed from 9.5% to 10%. These percentage changes will continue up until 2025.

What happens next?

The FWC will issue draft determinations and orders about how this decision affects awards. It will then update the pay rates in each award.

Following this wage increase, employers will be required to:

• Confirm the date the wage increase applies depending on the industry sector and award;
• Review the wages of their employees to ensure they are not getting paid below the minimum wages;
• Review the employment agreement to determine how they should handle the wage increase along with the Superannuation guarantee requirements;
• Ensure that processes are in place to implement the required changes;
• Consult with employees to ensure that they are aware of changes that apply to them.
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In the event your employees are covered by an enterprise agreement, it is important to ensure that the base rates in those agreements remain at least equal to the new minimum Modern Award rates.

How can we help?

Our HR consultants can help employers by conducting a wage review to ensure you are compliant with the wages and pay.

For more information regarding the recent wage increase please contact Key Business Advisors on 1300 4 ADVICE.

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