FY 2022 Fair Work Annual Minimum Wage Increase

On Wednesday, 16 June 2021, the Fair Work Commission announced a 2.5 % increase to the National Minimum Wage and Awards’ Pay Conditions, following its Annual Wage Review. The increase will apply for both the National Minimum Wage and eventually to all Awards’ Pay Conditions. The increase will be effective on the first full pay period on/after the pay increase date.

As of 1st July, employment costs will increase by 2.5% on Wages and by 0.5% on Superannuation.

Minimum Wage Increase

Once again this year the Fair Work Commission took a very careful approach in reviewing and increasing minimum wages, with COVID-19 hotspots and occasional Quarantine periods still happening in Australia.  However, Fair Work Commission President Justice Iain Ross also acknowledged the vastly different economic conditions from the previous Financial Year.

“There was a broad consensus in the submissions before us that the current performance of the economy has exceeded expectations and that the economic recovery is well underway,” Iain Ross.

From 1st July 2021 the minimum wage rates will be:

An updated Fair Work Information Statement will be made available to Employers for download.

Modern Awards’ Increase

Traineeship Wage Rates

Trainees pay conditions are included on Schedule E of the Miscellaneous Award (MA00104). The 2.5% increase in their pay condition will apply on the same date of the trainee’s industry or occupation award that covers them.

For example:

A trainee working in Childcare will receive an increase of 2.5% on their pay rate as of 1 July 2021, as the Children Services Award is part of the Awards increasing on 1st July.

A trainee working in a Fitness Centre instead, won’t receive the increase until 1 November 2021, as the Fitness Industry Award is scheduled to increase on this date.

Tips for Employers

Employers should review and update both Payroll processes and documentation to reflect the above changes. In detail:

1. Communicate with your employees
   Email employees to let them know about the pay increase, and how they will positively affect their pays.
2. Update your Employees’ Pay Rates in your Accounting Software
   Ensure the employee pay rates are updated by no later than the applicable effective date of the pay increase. This is also an ideal time to review their employment duties and re-assess their classified levels.
3. Re-test your employees’ Annual Salary or rates above their classified Award
   Ensure that any employees paid an Annual Salary or on pay rates above the Award, are still meeting the BOOT Test Criteria (Better Off On All Terms)
4. Update recurring wages bank transfers
   Any regular wages bank transfers should be stopped and updated with the new amounts once the new Tax Tables (and Fair Work pay increases) are applied to Payroll. Also, consider speaking to your Bank about starting to pay employees using Batch Payments (aba files)
5. Update your Payroll Documentation
   Ensure your Payroll Documentation is updated. This includes: update the Fair Work Information Statement in your onboarding documents and download the new Pay Rates.

As always we are at your disposal if you require assistance with meeting your Payroll compliance obligations.

References

https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/annual-wage-review-2021

https://www.fairwork.gov.au/pay/minimum-wages/apprentice-and-trainee-pay-rates

Disclaimer

This blog and attached resources are of general nature designed for informational and educational purposes only. They should not be construed as professional financial advice for your individual business. Should you need such advice, consult a licensed financial or tax advisor.