The Fair Work Commission has released its 2020 Annual Minimum Wage Decision, awarding a 1.75% increase to the national minimum wage and award-reliant employees.
The FWC decision increases the national minimum wage to $753.80 – or $19.84 an hour. This constitutes an increase of $13.00 a week or 34 cents an hour.
All award rates of pay will increase by 1.75% with three operative dates which have been selected based on the impacts of the COVID-19 pandemic.
The increase is less than the 4% sought by the ACTU, while both the ACCI and AiG called for a wage freeze.
The increase will be rolled out across three dates and employers should ensure they are aware of the date the increase applies depending on their award coverage as follows:
From 1 July 2020: “Group One” Awards which includes modern awards applying to frontline health workers, teachers and childcare workers and employees engaged in other essential services.
From 1 November 2020: “Group Two” Awards covering industry sectors that have been somewhat adversely affected by the pandemic, but not to the extent of Group Three Awards, including constructions and manufacturing.
From 1 February 2021: “Group Three” Awards covering those industries most affected by the pandemic, such as accommodation/food services, arts/recreation, aviation, retail and tourism.
The FWC panel took into account the significant downturn in the economy and the likelihood that it will enter a technical recession as a result of the “…unprecedented health crisis and the impact of government measures to prevent the spread of the COVID-19 virus..” (Annual Wage Review 2019-20  FWCFB 3500 (19 June 2020) para ). This downturn in the economy came after an existing slowing of the economy that followed the bushfires in late 2019 and early 2020.
The panel stated that the shock to the labour market as a result of the events of 2020 are unprecedented, and that these circumstances have made it difficult to assess underlying trends in the data. The panel considered that the current and future state of the Australian economy were “neatly encapsulated” in the 2 June 2020 Statement by the RBA Governor, which referred to the following:
- The Australian economy is experiencing its biggest economic downturn since the 1930s
- Household spending has weakened considerably, with investment plans being deferred or cancelled
- The depth of the downturn remains uncertain, although there are signs it may be less than expected
- The outlook remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy
Who is affected?
The 2020 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 be considered to 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.