Minimum Wage Increase Starts 1 July 2018 

The Fair Work Commission has revealed a 3.5% increase will apply to the minimum wage from the first full pay period after 1 July 2018.

This takes the new national minimum wage to $719.20 per week, or $18.93 per hour.

The changes only apply to employees who have their pay rates determined by the national minimum wage, a modern award or registered agreement which relies on the award system.

The awards are being updated by the commission and will be available in time for the 1 July cutover date.

If you’re unsure what awards apply to your workplace, you can use the Fair Work Commission’s award search tool found at this link:  https://www.fairwork.gov.au/awards-and-agreements/awards/find-my-award/

How was the decision reached?

Each year the Fair Work Act 2009 requires an expert panel to convene for annual wage reviews – this takes into account the national minimum wage, and modern award minimum wages in each financial year.  The panel makes an order to set, vary or revoke the award wage rates. In doing so they consider several factors including:

  • The state and competitiveness of the national economy
  • Inflation figures and employment growth statistics
  • Social inclusion in an effort to increase workforce participation
  • Living standards and needs of low paid workers
  • The principal of equal remuneration for work undertaken, encouraging productivity
  • Junior or employees with a disability and the training arrangements which may apply to ensure they receive fair wages.
  • The need to provide additional remuneration for overtime, irregular or unpredictable hours, working on weekends or public holidays or shift work.
  • The impact of decisions on business including productivity, employment costs and regulatory burdens

This decision impacts an estimated 2.3 million Australian workers, or 22.7% of all employees.

What you need to do:

Before 30 June, review the relevant award and decide on the classification of your employees as per their duties.  Once you are happy that you have the right classification for your employees, check the new rate as per the updated wage rates in the award.  Update your payroll system with the new rates.

An increase in wages does have an effect on your cashflow.  It is essential that you take this into account when preparing your budgets for the new financial year.  You may need to review your pricing to reflect this additional cost.

If you’re unsure how this may impact your payroll, please reach out to your trusted PJT Advisor for assistance before 1 July 2018.