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Alert: Fair Work Commission announces 3.3% increase to the national minimum wage.

The Full Bench of the Fair Work Commission has today determined to increase the National Minimum Wage by 3.3%, and for the same increase to be applied to the minimum rates in each Modern Award.   The Full Bench cited a number of economic factors that influenced its decision as to the extent of the increase, including:

  • an increase in real net disposable income of 6.8%;
  • an increase in inflation (although at the end of the RBA’s target range);
  • a 2.1% increase to CPI;
  • an increase in labour productivity and profit growth;
  • and increase in the unemployment rate to 5.8%; and
  • an assessment of business conditions is positive and above long-term average levels.

As to the social impact of the decision, the Full Bench stated:

“The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their relative living standards.”

The effect of the increase will mean that the National Minimum Wage will increase by $22.20 per week, from the current $672.70 ($17.70 per hour) to $694.90 per week ($18.29 per hour).

The 3.3% increase will take effect from 1 July 2017.

Employers should ensure that where the Modern Award rate is being paid, the increase is passed on to their Award-covered employees from 1 July 2017. It is also essential that Employers review pay rates for employees currently receiving over-Award payments, or engaged under Enterprise Agreements, to ensure that they do not underpay their employees when compared against the revised award rates, and/or continue to comply with the remuneration provisions of the Enterprise Agreement.

Employers should also note that the Fair Work Commission’s recent decision in relation to penalty rates in those targeted industries will begin operation from 1 July 2017, and that there will be transitional arrangements in place to implement those changes.  Aitken Legal will shortly be providing an update on these transitional arrangements.

Aitken Legal can be contacted for any enquiry about the wage increase as it affects remuneration arrangements, including through Modern Awards and Enterprise Agreements.

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