The Fair Work Commission has announced a 1.75% increase to the National Minimum Wage and Modern Award Minimum Wage.
For Modern Awards, this increase will take effect from 1 July 2020, 1 November 2020 or 1 February 2021, depending on your industry. For the National Minimum Wage, the change will occur on 1 July 2020 and any employee not covered by an award or agreement will be entitled to $753.80 per 38-hour week, or $19.84 per hour. An increase of $13.00 per week.
In a year marked by the COVID-19 health crisis, the Commission saw it appropriate to exercise caution in their decision. It was recognised that as a result of the economic downturn unemployment figures are increasing, hours worked are decreasing, while underemployment continues to increase.
It was determined that a conservative 1.75% increase would allow low income workers to maintain their living standards whilst preserving business viability.
In reaching their decision, the Commission recognised that a substantial increase to minimum wages would harm employees’ prospects of being hired and reemployed, and that the absence of an increase may push poorer Australians into poverty.
The decision to increase minimum wages by 1.75% comes after last year’s notably higher increase of 3%.
The Commission took a nuanced approach to this year’s decision – acknowledging how the economic downturn has impacted industries differently. In recognising the exceptional circumstances of COVID-19 for the economy and some industries in particular, the Commission favoured a staged commencement of the increase.
Industries comprised of essential services will experience the change first, followed by industries adversely affected, and then those most adversely affected, such as accommodation and food, arts and recreation, aviation, retail trade and tourism.
It is expected that approximately 25% of award covered employees will be affected by the 1 July change, 40% of award covered employees by the 1 November change, and 33% of award covered employees by the 1 February change.
PerformHR can help you better understand what the increases mean for your business, employees and your staff payments. This increase affects penalty rates and entitlements like annual leave and other allowances. We are here to support you, call us today on 1300 406 005 or reach out here.