In brief - From 1 July 2020 there have been changes to minimum wage rates, unfair dismissal compensation caps and the high income threshold 

Minimum wage increases

On 19 June 2020, the Fair Work Commission announced a 1.75% increase to minimum wages. The figure represented a compromise between unions who were pushing for a 4% increase to wages and employers/businesses that demanded a pay freeze due to the adverse effects of COVID-19. 

The Fair Work Commission Minimum Wage Panel determined that: 

  • Minimum rates of pay for adult full-time employees covered by modern awards will increase by 1.75%.

  • The national minimum wage for an award-free adult employee will increase to $753.80 per week, or $19.84 per hour.

  • Weekly wages will be rounded to the nearest 10 cents. 

Minimum wage increase operative dates

The Fair Work Commission divided industries into three distinct groups based on the level of the adverse financial impact of COVID-19 on that individual industry. For example, Group 1 Awards covered industries that were the least affected, Group 2 Awards covered industries with some impact and Group 3 Awards covered industries that incurred the highest level of impact. The operative date of these minimum wage increases in awards will depend on which Group your industry falls in to. 

The operative dates of each Group and their respective industries are as follows:

Group 1 (Start of the first full pay period on or after 1 July 2020)

  • Banking, Finance and Insurance Award 2020

  • Children’s Services Award 2010

  • Educational Services (Schools) General Staff Award 2020

  • Educational Services (Teachers) Award 2010

  • Health Professionals and Support Services Award 2020

  • Medical Practitioners Award 2020

  • Nurses Award 2010, and

  • Social, Community, Home Care and Disability Services Industry Award 2010

Group 2 (Start of the first full pay period on or after 1 November 2020)

  • Building and Construction General On-site Award 2010

  • Clerks—Private Sector Award 2020

  • Educational Services (Post-Secondary Education) Award 2020

  • Food, Beverage and Tobacco Manufacturing Award 2010

  • Higher Education Industry Academic Staff Award 2020

  • Horticulture Award 2010

  • Professional Employees Award 2020

  • Real Estate Industry Award 2020

  • Security Services Industry Award 2020, and

  • Textile, Clothing, Footwear and Associated Industries Award 2010

Group 3 (Start of the first full pay period on or after 1 February 2021)

  • Amusement, Events and Recreation Award 2020

  • Fast Food Industry Award 2010

  • Fitness Industry Award 2010

  • Hospitality Industry (General) Award 2020, and

  • Restaurant Industry Award 2020 

Employers will need to assess which modern award rate will apply to their workforce and whether it will fall in to Group 1, 2 or 3. Employers will then to need to ensure that from the relevant date designated from the relevant Group, they are paying their workforce the increased minimum award rate. 

The full list of industries in each Group can be accessed at paragraph 167 to 187 in the decision

Casual loadings

The casual loading in modern awards will remain at 25 per cent. It is important that employers carefully examine casual working arrangements and separately identify casual loading amounts from base rates of pay in contracts of employment and payslips, to comply with the reasoning in the WorkPac Pty Ltd v Skene [2018] FCAFC 131 and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 decisions. 

Enterprise agreements

Employers who have an enterprise agreement in operation (even if it has passed its nominal expiry date) must ensure that the base rate of pay in the agreement does not result in any employee being paid less than the relevant modern award pay rate or, if no award applies, the national minimum wage. 

Employers who utilise annualised salary arrangements permitted by some awards should compare the annualised salary against the updated award to ensure that employees are receiving sufficient remuneration. Some modern awards have been amended in relation to annualised salary requirements. 

Increase to the high-income threshold and compensation limit

In addition to increases to minimum wages, from 1 July 2020, two other important monetary figures will increase:

  1. The high-income threshold increases from $148,700 to $153,600. This amount affects how a modern award applies to an employee, and affects an employee’s access to the unfair dismissal jurisdiction of the Fair Work Commission.

  2. The compensation limit under unfair dismissal laws also increases from $74,350 to $76,800. The compensation limit is the maximum compensation available to an employee successful in an unfair dismissal claim.

Employers need to be aware of the changes discussed in this article when determining wages, assessing unfair dismissal eligibility and workplace law compliance. Seek advice if unsure of your obligations.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.

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