Fair Work wage decision
A lot of people were shocked with the announcements of inflation at 5.1% over the last year. It was much higher than expected, and it’s expected to stay high over the next year or so. We’ll take a closer look at inflation below, but the inflation rate was reflected in the Fair Work Commission decision.
Every year the Fair Work Commission conducts a wage review into the minimum wage, as well as the wages covered by different awards, of which there’s 122. They have a look at the current conditions and take submissions from industry and employee groups, and then come to a determination about how much those minimum wage and award rates need to increase.
The Fair Work decision is something that you should diarise to review every year. It’s generally announced around 15 June each year with the new rates take effect on 1 July, although over the last couple of years, they have delayed some of those effective dates due to the impacts of COVID.
‘The Fair Work decision is something that you should diarise to review every year.’
For 2022, the commission decided to increase the minimum wages in Modern Awards by:
- $40 per week, where the person is currently earning less than $869.60 per week
- 4.6%, for the award rates where the wage is greater than $869.60 per week.
You may have heard media reports about 5.2% increases, that’s because the national minimum wage is being increased by 5.2%, taking it to $812.60 per week or $21.38 per hour.
How does the Fair Work decision affect my business?
Now, you might be wondering, what on earth does this have to do with me? That’s a fair question. And that the answer is plenty, if you have anyone covered by an award. The vast majority of businesses do. I find that most business owners have no idea about their responsibilities in this area until they get into a bit of trouble.
‘most business owners have no idea about their responsibilities in this area until they get into a bit of trouble’
It’s really important that you have done an assessment on every role in your organisation to determine whether that role is covered by a modern award. Most businesses will find they have award-covered employees are people in:
- administrative roles
- technology positions
- some sales positions
What if I pay salaries not wages?
Even if you pay a salary, the award still applies. This is a really important point because business owners often tell me ‘We don’t pay the award, we pay a salary’.
‘Even if you pay a salary, the award still applies.‘
It’s a great idea to pay a salary because it can help with the administrative burden. However, it doesn’t mean that the award doesn’t apply. You can’t remove award coverage by having a contract of employment. This means that you have an obligation, even if your people are on a salary, to check that the salary is at least equal to what they would have earned under the award.
Wage theft warning
A failure to check this was how we ended up with the very high-profile, so-called wage theft cases over the last couple of years.In some cases,the employers weren’t checking that the salary they paid was the equivalent to what employees would have otherwise earned under the award.
Check award rates
So it’s very important to check the relevant award for the new rates required to be paid from 1 July (though some travel and hospitality awards take effect on 1 October). If you pay a salary for a position covered by an award, you need to make sure you still meet those new minimum award rates.