The Fair Work Commission has released its 2016 Annual Minimum Wage Decision, awarding a 2.4% increase to Award-reliant employees.

The FWC decision increases the national minimum wage to $672.70 per week, or $17.70 per hour. This constitutes an increase of $15.80 per week or 41 cents per hour being the equivalent of a 2.4% minimum wage increase. All award rates of pay will increase by 2.4% with effect from the first pay period commencing on or after 1 July 2016. Weekly wages should be rounded to the nearest 10 cents.

The FWC panel pointed to historically low levels of inflation and wages growth as factors in the modest increase in the minimum wage, and stated that this increase was unlikely to have a negative impact on employment.

Who is affected?

The 2016 Minimum Wage Decision applies to all employees covered by the national workplace relations system. This means the new Minimum Wage will apply to the majority of employers in Australia except for:

·         employers who are sole traders and partnerships in Western Australia;

·         corporations in Western Australia whose main activities are not trading or financial;

·         state government public sector employers and employees (except in Victoria); and

·         some local government employers and employees.

If an employee is paid above the relevant modern award base rate of pay, 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

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 1 July 2016.

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 on (02) 9805 5600.

Andrew Gordon, Solicitor, BlandsLaw