Over the last few years, a number of high profile businesses have been found to be underpaying workers. These cases have angered the public and seen Fair Work Australia commit to furthering their efforts to stamp out such practices. Therefore it is vital that business owners remain aware of all their statutory obligations regarding the payment of wages, especially the minimum wage.
What is the Minimum Wage?
The national minimum wage is currently $19.49 per hour, or $740.80 per week. With casual employees receiving a loading of at least 25%.
However, from the 1st July 2020 the minimum wage is being increased.
The new minimum wage will be $19.84 per hour, or $753.80 per week. Casual employees will continue to receive at least a 25% loading.
Modern Awards
Since 2010, Modern Awards have existed to outline the minimum entitlements for wages and conditions of employment for employees covered under each agreement. Each award will usually relate to a specific industry or occupation.
Modern awards cover details such as minimum wage rates, annual leave, hours of work, penalty rates and other conditions.
From 1st July 2020, the minimum wage under awards will increase by 1.75%.
In some instances, employees aren’t covered by an award or enterprise agreement, in which case the national minimum wage safeguards against exploitative arrangements.
If you’re not sure which award applies, you can use FairWork’s find my award tool.
When will my award increase?
The increase to awards will happen in 3 groups.
Group 1 Awards – from 1 July 2020
- Frontline Heath Care & Social Assistance Workers
- Teachers and Child Care
- Other Essential Services
Group 2 Awards – from 1 November 2020
- Construction
- Manufacturing
- A range of other industries
Group 3 Awards – from 1 February 2021
- Accommodation and Food Services
- Arts and Recreation Services
- Aviation
- Retail
- Tourism
Full List of Award Groups
Minimum Wage for Juniors
In Australia, a junior employee is any employee under the age of 21. The minimum wage for junior employees is different depending on their age and is determined as a percentage of the national minimum wage. Therefore, the minimum wage for these employees will also increase.
What Happens If An Employee Is Paid Above The Award Wage?
As an employer, you may choose to pay an employee more than the minimum wage outlined by the Commission, award or agreement. However, you will need to watch out for increases to the wage rates and make sure that you are paying above any new rate.
We would recommended that you review your wages now to ensure that you are still paying on or above the minimum wage. If you don’t keep up with the relevant pay increases, you risk underpaying your staff.
What About Employees Who Are Not Covered Under A Modern Award – What Wages Do They Need To Be Paid?
If an employee is not covered by an award or agreement then either the national or state minimum wage applies (depending on if the business is covered by the Fair Work system or the WA state system).
How does this work with JobKeeper?
JobKeeper requires employers to pay their employees as usual, and then top-up any shortfall to the minimum payment of $1500 per fortnight. Employers must reflect the increase for any hours worked.
Do Different States Have Different Minimum Wages?
While most states fall under the Fair Work Act 2009 and as such, the new national minimum wage of $19.84 per hour, some businesses in Western Australia do not.
The West Australian System
Some businesses are covered under the West Australian Industrial Relations system. These business include:
- sole traders (e.g. Jane Smith trading as Jane’s Café)
- unincorporated partnerships (e.g. Jane and Bob Smith trading as Jane’s Café)
- unincorporated trust arrangements (Jane and Bob Smith as trustees for the Smith Family Trust trading as Jane’s Café)
- incorporated associations that are not trading or financial corporations and other not-for-profit organisations that are not trading or financial corporations
These businesses are not affected by the increase to the National Minimum Wage and are instead subject to any increase mandated under the West Australian system. To date, no such increase has been announced, so the West Australian minimum wage remains at $19.66 per hour, or $746.90 per week.
Some employers are required to pay a Location Allowance under the WA Awards. From July 1st 2020 they will be required to increase the amount paid. A full list of the new location allowance amounts is available here.
UPDATE – 01/07/2020
The minimum pay rates for award free employees and all pay rates in WA awards will remain unchanged from 1 July 2020 to 31 December 2020. From the first pay period on or after 1 January 2021, the WA minimum wage will increase by 1.75% per week.
Summary
From the 1st July 2020 the minimum wage is being increased. The new minimum wage will be $19.84 per hour, or $753.80 per week. Casual employees will continue to receive at least a 25% loading. If you are covered under an award the minimum wage will increase by 1.75%.
We would recommended that you review your wages now to ensure that you are still paying on or above the minimum wage.
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