Insights

In brief - Fair Work Commission delivers annual wage review decision

On 4 June 2014, the Fair Work Commission (FWC) announced an increase of 3% to the federal minimum wage. This equates to an increase of $18.70 per week, taking the minimum wage from $622.20 to $640.90 per week. 
 
The new minimum wage comes into operation on 1 July 2014. 

Wage increase higher than increment sought by employers

The Annual Wage Review 2013-14 decision is only 0.7% below what the Australian Council of Trade Unions (ACTU) sought in its submissions. The 3% increase is substantially higher than the figures proposed by employer associations, with the Australian Industry Group seeking a 1.6% increase. 

Who is affected by the minimum wage increase?

The decision to increase the minimum wage will affect employees in the national system who are covered by a modern award; or who are not covered by either an award or an agreement.

What should you do as a business owner?

Business owners will need to ensure that they comply with the new minimum wage. In order to ensure compliance, employers should evaluate all employee relationships, including employees who are paid:
  • in accordance with a Modern Award
  • an annualised salary
  • all-inclusive hourly rates
  • above the current minimum wage rate
  • in accordance with an enterprise agreement
In examining the employment relationship to ensure compliance with the new minimum wage, employers should evaluate all facets of the employee relationship, including work related allowances, penalties and loadings. 
 
Employers should also be aware that on 1 July 2014, employers' compulsory superannuation contributions will increase to 9.5%. Accordingly, the increase in minimum wage and superannuation contributions will affect the amount that employers are required to contribute to employees' superannuation funds. 

What happens if you do not comply with the minimum wage increase?

Failure to comply with the new minimum wage from 1 July 2014 can have significant consequences for an employer, including:
  • claims for underpayment of wages to the Fair Work Ombudsman, the Federal Court or the Federal Circuit Court
  • breaches of the Fair Work Act 2009 (Cth), which can result in fines of up to $51,000 per breach

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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