On Friday 3 June 2011, the Minimum Wage Panel of Fair Work Australia handed down its Annual Wage Review Decision. This Decision applies to all private sector businesses, i.e. National System Employers.
Business SA Chief Executive Officer, Peter Vaughan, said that it was disappointing that businesses would face another hit.
“This increase in minimum wages is likely to flow on into price increases and force businesses to review employment levels,” Mr Vaughan said.
“South Australia is a small business State and this ruling will add an enormous amount of pressure to those that can least afford it.”
In summary, the Decision provides for an increase of 3.4 per cent to the National Minimum Wage, all Modern Awards, Single-Enterprise Awards and transitional instruments, effective from the first full pay period commencing on or after 1 July 2011. As a result of awarding a percentage increase, the monetary increase will differ from award to award and classification to classification, with adult weekly wages being rounded to the nearest 10 cents.
The National Minimum Wage increases to $589.30 per week (or $15.51 per hour based on a 38 hour week), representing a 3.4 per cent increase or an increase of $19.40 per week.
Two Special National Minimum Wages have been set for award/agreement free employees with a disability:
For employees with a disability whose productivity is not affected: a minimum wage of $15.51 per hour (or $589.30 per week, based on a 38 hour week).
For employees with a disability whose productivity is affected: a minimum wage based on an assessment under the Supported Wage System.
In addition, a Special National Minimum Wage for award/agreement free junior employees and a Special National Minimum Wage for award/agreement free employees to whom training arrangements apply have been developed:
For award/agreement free junior employees: a minimum wage based on the percentages for juniors in the Miscellaneous Award 2010 applied to the National Minimum Wage.
For award/agreement free employees to whom training arrangements apply: a minimum wage based on the apprentice wage provisions and the National Training Wage Schedule in the Miscellaneous Award 2010. Adult apprentices should not receive less than the National Minimum Wage.
Further, the casual loading for award/agreement free employees has been increased to 22 per cent.
The increases also flow-on on a proportionate basis to junior employees, employees to whom training arrangements apply, employees with a disability and employees with basic piece rates of pay.
In accordance with Modern Award provisions, these increases may be able to be absorbed into any existing amounts currently being paid over and above the relevant minimum rates. However, in assessing whether absorption is possible, it is essential that transitional minimum wage obligations are fully considered.
Where employers and employees are covered by an enterprise agreement, employees must be paid a rate that is at least equal to the base rate of pay of the relevant Modern Award. However, businesses must refer to their enterprise agreement to determine the specific application of the Annual Wage Review to the agreement.
Employees with a Disability
The Supported Wage System minimum weekly payment in Modern Awards and in the Special National Minimum Wage for employees with a disability whose productivity is affected, will be set at the weekly equivalent of the per fortnight income test free threshold for the Disability Support Pension.
This will be adjusted in accordance with past practice. Businesses will be informed in due course of the increased Supported Wage System minimum weekly payment.
Rationale
In making its decision, the Minimum Wage Panel indicated that it has considered a range of objectives, including inflation, employment growth, relative living standards, the needs of the low paid and social inclusion through increased workforce participation. The Panel rejected employer submissions to delay the increase due to recent natural disasters.
Allowances
The Decision increases work-related allowances as these are based on a standard rate specified in the relevant Modern Award and increased through the Annual Wage Decision. However, expense-related allowances are increased on the basis of movements in applicable consumer price index figures and therefore not automatically increased. Draft orders will be issued by Fair Work Australia to adjust expense-related allowances. Businesses will be informed of the increased expense-related allowances in due course.
Business SA Modern Award subscribers will be informed of the wage increases relevant to their awards via their Modern Award Subscription service.
For assistance, call Business SA’s Business Advisory Centre on 08 8300 0101.
