In May this year the Fair Work Commission held its annual review of wages, in which it was decided on a minimum wage increase of 3%. Whilst you likely heard that the increase would apply to the National Minimum Wage, most workers actually have their minimum rate of pay set by the Modern Award relevant to their industry. As such, it is important to note that the 3% increase also applies to minimum wages set by Modern Awards.

How will the wage rise affect my business?

Businesses that are covered by a Modern Award will need to ensure that they comply with the increased minimum employee pay rates set out in the relevant Award. You can find out which Award applies to your business using the Fair Work Ombudsman’s Find my award tool.

Some employers may have an enterprise agreement or other registered agreement in place, in which case the Modern Award will not apply. Nonetheless, the base pay rate in the agreement must not be less than the base pay rate set out in the relevant award. For this reason employers that utilise an enterprise or other registered agreement should ensure that the base rates of pay in their agreement do not fall below the minimum rates set out in the relevant Modern Award as a consequence of the wage rise.

When does the increase come into effect?

Employers will need to increase their pay rates in accordance with the Award from the first full pay period commencing on or after the 1st of July 2019. Failure to pay wages in line with the updated Modern Awards may expose businesses to an underpayment of wages claim and investigation by the Fair Work Ombudsman.

What if my employee’s wage is higher than the minimum rate of pay?

Even where an employee’s wage is above the minimums set out in the Modern Award, employers may still be obliged to adjust their pay rates in certain circumstances. Some contracts of employment may specify an obligation for employers to pass on the wage increase even where their pay is above the minimum specified in the Award.

Where there is no obligation created by a contract or other instrument for an employer to pass on increases, then no change will be required as long as the employee’s wage remains above the prescribed minimum.

Where can I find the updated minimum pay rates?

The new pay rates applicable to the various Modern Awards can be found on the Fair Work Ombudsman’s Pay Calculator.

Navigating the modern awards system can be a complex and confusing task with serious consequences if you get it wrong. If you are unsure about what wages your employees should be receiving in light of the recent changes to Modern Award rates, please do not hesitate to contact us on 02 9331 0266.