The Minimum Wage Panel has released the findings of their Annual Wage Review for 2016 this afternoon. In this article, our employment law specialists outline the key changes this will have on your business and what you need to do to ensure compliance.

Annual Wage Review 2016

The Annual Wage Review was decided this afternoon. In this article, our employment team summarise the key changes. 

Wage Increase

The Minimum Wage Panel has decided that the National Minimum Wage and Award rates will increase by 2.4%. This is once again a smaller increase than the year before.

From 1 July 2016, the National Minimum Wage (NMW) will be $672.70 per week or $17.70 per hour, an increase of $15.80 per week or 0.41 cents per hour.

Adult wage rates calculated under Modern Awards will also increase from the first full pay period on or after 1 July 2016 by 2.4%, rounded up to the nearest 10 cents. This also applies to minimum wages for junior employees, employees to whom training arrangements apply, employees with disability and to piece rates.

For those junior employees not covered by an Award, the increased NMW will continue to be applied based on the following percentage amounts.

Age (Years) Percentage (%) of the NMW
20 97.7
19 82.5
18 68.3
17 57.8
16 47.3
Under 16 36.8

The Casual Loading rate remains the same at 25% with the exception of the Business Equipment Award, which provides for a loading of 21% for this calendar year, increasing each year until reaching parity with the other Awards.

The Fair Work Commission will shortly post draft determinations for each of the Modern Awards on its website which will be confirmed before the end of the financial year.

Calculation of Penalty Rates and Loadings

The Pay and Conditions Tool found at the Fair Work Ombudsman’s Website will be updated once the Award rates are finalised but that will only occur very shortly before 1 July 2016. If you need rates calculated in advance of that date, we are able to assist you.

Wages That Will Not Increase

  • Employees who are covered by an Award but have entered into a written guarantee of annual earnings that their remuneration will be higher than the prescribed threshold.
  • Salaried employees, whose annual salary is equal to or higher than what they would have been paid under the applicable Award.
  • Employees who, whilst covered by an Award, are paid at a sufficiently higher weekly or hourly rate, such that what they are earning is still more than the Award minimum after 1 July 2016.
  • Employees covered by an Enterprise Agreement which provides for remuneration higher than that payable under the relevant Award.
  • Employees who are not covered by an Award or Agreement but are earning sufficiently higher than the National Minimum Wage that the increase to the NMW will not be more than their current earnings.

What You Need To Do

  1.  Review your wage arrangements for each individual employee and double check that the 1 July increase does not impact on any of your employees’ remuneration.
  2.  Ensure that any wording of your employment contracts is not affected.
  3.  If you are paying employees an annualised salary based on Award rates, now is the time to review their wages to ensure that what you are paying is sufficient to absorb the increase. Make sure that you include an allowance in those calculations for increases to penalty and shift rates and other Award allowances.

What Else Is Likely to Increase?

The prescribed threshold for written guarantees of earnings and for the unfair dismissal jurisdictions will also increase. The Fair Work Commission will announce these increases in due course.

Practice Area: Employment

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