End of Financial Year
Breaking Down the Increase to Award Minimum Wages
Each financial year, the Fair Work Commission (FWC) appoints an Expert Panel to conduct an Annual Wage Review. The Review, adhering to objectives set out in the Fair Work Act 2009, includes several months of research, submissions and consultations in order for the Panel to review the national minimum wage (NMW) and modern award minimum wages. For a closer look at which governments, parties and groups proposed or argued an increase, dive in here.
As a result of the Review, the Panel will issue a NMW order and may set, vary or revoke modern award minimum wages.
On the 15th June 2022, the FWC issued the Decision for the Annual Wage Review 2021-22 and the increases which will come into effect from 1 July 2022 are as follows:
National Minimum Wage Increase
The national minimum wage will increase by $40 per week, equating to an increase of 5.2%. The NMW from the 1 July 2022 will be:
- $812.60 per week, or
- $21.38 per hour
This new minimum wage will affect all employees not covered by an award or registered agreement.
Modern Award Minimum Wage Increase
The modern award minimum wage will increase by 4.6%. This increase is subject to a minimum increase for award classifications of $40 per week and based on a 38-hour week for a full-time employee. This means that modern award minimum wages from 1 July 2022 (with some exceptions discussed below) will be:
- rates above $869.60 per week will receive a 4.6% increase, or
- rates in adult award classifications that are below $869.60 per week will be increased by $40 per week
Is the 4.6% increase applicable to all modern awards?
In recent years, there have been a number of exceptional circumstances taken into consideration. In the 2019-20 Review, the Panel decided that due to the unprecedented impacts of COVID-19 on businesses, the economy, and the community, the award minimum wage increases would be separated into 3 groups.
The 3 groups were categorised based on industry clusters and increases were awarded with a staggered approach, occurring on either 1 July 2020, 1 November 2020 or 1 February 2021.
As part of the 2020-21 Annual Review, the Panel reviewed whether these classifications were still relevant and concluded that further to industry clusters, the awards should be reclassified based on the experiences of the industries. These being; fully recovered; almost recovered; and lagging recovery. As a result, the Panel agreed to delay the increase of 22 awards, with the last being awarded on 1 November 2021.
This year, after consideration of continued impacts of COVID-19, severe flooding in parts of NSW and QLD, analysis of ABS employment data, and submissions from employer parties, the Panel was satisfied that exceptional circumstances continue to exist and warrant a delayed operative date for modern awards in the aviation, tourism and hospitality sectors.
So whilst the majority of awards will see an increase from 1 July 2022, the following 10 awards will see a delayed increase from 1 October 2022:
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Air Pilots Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Hospitality Industry (General) Award 2020
- Registered and Licensed Clubs Award 2020
- Restaurant Industry Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Alpine Resorts Award 2020
Most employees are covered by an award. If you or your client are unsure on which award their employees should be paid under, use Find my Award, or click here to view a comprehensive list of awards.
How does KeyPay manage Modern Award increases?
This is where you can start to breathe easy as KeyPay has 47 pre-built awards available on KeyPay Plus plans. For customers using these pre-built awards, there is no manual intervention required in order to stay compliant with the upcoming increases as KeyPay maintains all changes to award conditions. Updated versions of the award packages will be published by 1 July and notifications will be available on each affected business’ dashboard.
Customers can then apply the award update once they have completed the last pay run subject to the pre-award wage increase. Applying award updates is easy… just a matter of a few clicks, thereby removing the need for time-consuming audits and reducing human error on manual updates. The new pay rates will then automatically apply in the roster for accurate costing, employee timesheets and in the next pay run.
If you’re not currently using KeyPay, you’ll need to extensively audit employee existing pay rates and compare against the new award rates to ensure they do not fall below the new minimum wage rates. Learn more about KeyPay’s automated award interpretation or get in touch with the team to find out how KeyPay supports Modern Award compliance.