In brief - In addition to the increase to the national minimum wage, employers should also consider the increase to all Award rates and the impact on rates of pay under many enterprise agreements

On 15 June 2022, the Fair Work Cimmission (FWC) handed down its National Minimum Wage (NMW) decision. The FWC has ordered that the NMW be increased by 5.2%, from $20.33 per hour to $21.38 per hour from 1 July. This represents a $40 a week increase for affected workers.

Where it is estimated less than 200,000 workers are paid the NMW, and most of those workers are engaged on a part-time or casual basis, the overall direct cost of this decision is likely less than $10 millon across the economy.

Of more significance is the 4.6% increase to all award rates, with 2.7 million Australians covered by Awards. This increase will have an impact on the rates of pay under many Enterprise Agreements (EAs).

What does the NMW decision mean for employers?

  • All employers should consult with their payroll teams to determine that Award rates are increased in line with the NMW decision either by 1 October in respect of aviation, tourism and hopsitality Awards and 1 July in respect of the balance of the Modern Awards. 

Employers who have EAs in place should ensure that the minimum rates of pay provided in those EAs are at least equal to the NMW increases. 

Failure to pass on the increase could lead to wage claims by employees and investigations by the FWO.

The effect of this Award increase will also likely be felt by employers who are negotiating new EAs this financial year. A high level review of recently negoitated EAs indicates that up until March/April 2022 EA rates seem to have inreased by 3-4.5% in most sectors. Given the NMW decision has inreased award rates by 4.6%, it may be expected that employees and their representatives may start their negotiations at 4.6%. 

Click on the link to view the Annual Wage Review 2021–22 decision [2022] FWCFB 3500.

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 2022.

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