As of July 1st, the Fair Work Commission has ruled the minimum wage in Australia will be increased by 5.2% to $21.38 per hour. This latest ruling will mean around 2.7 million workers across the country will earn $40 more per week.
Here are a few things businesses can do to prepare for the higher minimum wage:
National Minimum Wage increase
Employees must be paid the National Minimum Wage if they have no coverage by an award or any other agreement.
Moreover, starting from 1 July 2022, the National Minimum Wage is rising by $40 per week or 5.2 percent.
The National Minimum Wage in effect right now is $21.38 per hour or $869.60 per week.
Australia’s minimum wage, which has been $20.33 per hour or $772.60 per week since 2021, has come under pressure from advocacy organizations to be raised to keep up with rising inflation.
What is the Minimum Wage?
Australia’s minimum wage is owed to all employees. The amount of compensation before taxes is referred to as the minimum wage (gross pay).
The National Minimum Wage or the minimum wage outlined in their award or agreement may set the minimum wage for an employee. Depending on their employment type, age, or levels of work capacity, such as for apprentices or junior employees, some employees may receive a different minimum salary.
What are the Modern Award Minimum Wages?
This is the award covering the wages according to the industry and occupation of Australian employees. There are numerous awards. Thus, as an employer, you must ensure that you are paying your employees under the relevant award.
This award minimum wage increase allows employees to get more pay than the minimum wage for award-free employees. However, it depends on their classification under the award, the number of working hours, and their timing.
Businesses subject to minimum wage rules fall under the protection of Fair Work. A business agreement or employment contract may also include remuneration that exceeds the National Minimum Wage or the equivalent award rate.
What do employers need to do after this announcement?
We recommend that employers should: consider the importance of your overall business goals, your workforce hours and pay rates, and compliance with the latest wage hikes.
- Audit your employees' current salary and entitlements, and consider the consequences of the FWC's pay decision.
- Also, audit your employees' current employment contracts and pay rates right now. It will help you ensure that your company is ready to start paying the new minimum rates on July 1, 2022, and then on October 1, 2022, for those in the aviation, tourism, and hospitality sectors. Indeed, this is the safest way to ensure that firms do not underpay employees as the new fiscal year begins.
- When strategizing your staff inside your organization, consider the importance of your overall business goals, your workforce hours and pay rates, and compliance with the latest wage hikes.
Wrap up
With the increasing rate of inflation, if you are the company that is subject to a minimum increase in wages of your employees, you should feel lucky to be a help. We get it; it is often hard to understand the wages and calculate each employee’s compensation with accuracy.
