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Fair Work Commission Approves 3.5% Increase to Minimum Wage

Libby Pallot, Anthony Massaro, Abbey Burns, Ben Tallboys, Caitlin Walsh

The Fair Work Commission has today released its annual wage review for the 2017-2018 financial year.

You can read the full decision here. This alert sets out what you need to know about the increase.

How much is the increase? 

Modern Award minimum wages will be increased by 3.5%. The national minimum wage will become $719.20 per week or $18.93 per hour, which also constitutes an increase of 3.5%. 

When do the new wage rates commence? The changes come into effect on 1 July 2018.

The Commission releases draft determinations about how the increase will affect Modern Awards and updated Pay Rate guides associated with each Modern Award are published on the Fair Work Ombudsman website.

What does this mean? If you pay your employees based on the national minimum wage or the minimum wages in an award, you need to review these wages, including any allowances tied to these wage rates. Where necessary you may need to increase your employees’ rates to ensure they meet the new minimum wages.

Enterprise agreements may also be affected by the decision.  If the rates of pay and allowances in an underlying award exceed the rates in the enterprise agreement, then the higher minimum wage rates will apply.

Why did the increase occur? In delivering the Commission's annual wage review, Justice Iain Ross highlighted that the economic indicators point “more unequivocally to a healthy national economy and labour market, with strong growth in full time employment and the participation rate.” The wage rise recognises the positive economy and provides a “real improvement on those employees who rely on minimum award and minimum wage rates.

The ACTU had asked for a 7.2% increase in the federal minimum wage, while the Australian Industry Group argued that the minimum wage should not be increased above 2.1%.


How can Russell Kennedy help? 

Getting pay rates right is important for any business. If you would like help determining the award coverage of your employees, or applying the 3.5% wage increase, please do not hesitate to contact our Workplace Relations, Employment & Safety Team.

If you'd like to stay up to date with Russell Kennedy's insights, please sign up here.

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