The Fair Work Commission recently announced that the minimum wage is set to increase by 3.3% on July 1st 2017. This affects employers paying to Award, as they will increase as well. It also affects some enterprise agreements if they refer to the minimum national wage rate increase.
This is the same date that penalty rate cuts for Sundays and public holidays apply across retail, hospitality, pharmacy and fast food industries.
A requirement of The Fair Work Act is that a review of the national minimum wage and minimum wages in modern Awards is conducted each financial year.
It’s worth noting that this rise is higher than it has been in years. Last year the Fair Work Commission raised the national minimum wage by 2.4% and the year before that 2.5%. The Fair Work Commission president Iain Ross said that this decision was based on subdued inflation, strong company profits and doubts over the link between minimum wage rises and negative employment outcomes. He said international research had “fortified our view that modest and regular wage increases do not result in disemployment.”
From our discussions with our small to medium business clients, there is a worrying concern that this wage hike will hurt bottom line profitability and also cancel out any benefit derived from the penalty rate cuts to make operating on Sunday more cost effective. The unilateral increase adds up for many businesses who operate in the SME market to be an increase that directly impacts operating costs and bottom lines.
Nonetheless, the decision is final and it’s the law. The penalties for underpaying workers can be hefty and is unfair and against the law. So, what do you need to do?
- Double check that your rates are correct
- Make sure that you apply the new pay rates from the first pay period after 1 July, 2017.
- If you are working in one of the industries where the penalty rates are changing, that you understand what these changes are.
The increase does not affect employees that are earning more than minimum wage or Award rates.
If you need any assistance in ensuring your pay rates are correct, feel free to give us a call at HR Gurus 1300 959 560.
Written by resident HR Guru Jessy Warn.