The Fair Work Commission has released its 2022 Annual Minimum Wage Decision, awarding a 5.2% increase to the national minimum wage rate, and around 4.6% increase to award rates of pay.
The FWC decision increases the national minimum wage to $812.60 per week – or $21.38 an hour. This constitutes an increase of $40 a week or $1.05 cents an hour. Award rates of pay that are above $869.60 per week will increase by 4.6%, while rates below $869.60 per week will increase by $40 per week (based on 38 hours per week for a full-time employee).
The increase is close to the 5.5% sought by the ACTU and is significantly above the submissions made by employer groups. The FWC panel also noted the submission of the Australian Federal Government that the wage decision should ensure that the real wages of low-paid workers are not effectively reduced by the operation of higher rates of inflation.
The FWC panel noted that the principal factors influencing the wage decision were the emerging inflationary pressures, noting a CPI rate of 5.1% which is expected to increase, as well as the tightening employment market.
The increase will generally apply from 1 July 2022 except for certain awards in the aviation, tourism and hospitality sectors, where the increase will apply from 1 October 2022. The delay in the operation of the wage increase is due to exceptional circumstances that the Commission found still exists in these industry sectors.
The FWC panel noted that this staggered implementation will mean that some businesses will face two wage increases within 12 months, but this disadvantage is largely offset by the fact that these same sectors had the benefit of delayed implementation of wage increases in 2021.
Who is affected?
The 2022 Minimum Wage Decision applies to all employees covered by the national workplace relations system. If an employee is paid above the relevant modern award base rate of pay then, provided an employee’s over-award payment still results in them being paid at least the new base rate of pay, the employer will have met their obligation with respect to the minimum wage increase.
What employers need to do?
Firstly, employers should confirm the date that the wage increase applies depending on their industry sector and applicable award(s).
Employers have a legal responsibility to ensure that all of their employees are paid at least what they would receive under a modern award, registered agreement or national minimum wage order. We recommend a review of your payroll obligations to ensure you are meeting your responsibilities in readiness for the applicable date that applies to your industry sector.
Should you require any assistance in reviewing your payroll obligations or if you have any questions about this wage review and its impact, please contact us.