Economic growth leads to largest minimum wage jump since 2011

Tuesday 6 June 2017 saw Fair Work Australia’s Minimum Wage Panel hand down the largest increase to the national minimum wage since 2011.

The increase

As of 1 July 2017, the national minimum wage will rise to $694.90 per week.  This increase means the minimum an employee will now receive is $18.29 per hour and will provide full-time employees on the minimum wage with an extra $22.20 per week.

For those employees covered by an award, the minimum wage will rise by 3.3% and weekly wages will be rounded to the nearest 10 cents. For example, a Level 1 employee receiving award rates under the Clerks- Private Sector Award 2010 would currently be receiving $715.20 per week.  After July 1 2017, this employee will be paid an extra $23.60, bringing their weekly pay to $738.80.

The rationale

Each financial year, the Minimum Wage Panel conducts a review of the national minimum wage and the modern award minimum wages.

The Minimum Wage Panel is entitled to vary or revoke the minimum wages set out in modern awards, and is required to make a minimum wage order setting the national minimum wage for the upcoming financial year.

Under the Fair Work Act, the Panel must take into account the performance of the Australian economy, the relative living standards and needs of those living on minimum wages and the need to provide a range of fair minimum wages to junior employees, trainees and employees with disabilities.  The Panel must also consider the objectives of promoting social inclusion by increasing workforce participation and the principle of equal remuneration for work of equal or comparable value.

In a statement released with the decision, the Panel acknowledged that past minimum wage increases may have been “overly cautious”, but explained that this caution had been due to the fear of large increases pushing employers to cut hours or staff.

When does it apply?

The increase comes into effect on 1 July 2017. If you pay your employees minimum wage or award rates, you must implement the increase in the first full pay period for each employee on or after 1 July 2017.

If you need guidance on how the upcoming minimum wage increase will affect your business, contact Claudia Lewin on 08 9321 3755.

The information published in this update is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.