Minimum Wages to Rise by 2.4%

Annual Wage Review Statement [2016] FWCFB 3506 (31 May 2016)

The Fair Work Commission has published its decision into its annual review of minimum wages. The Federal Minimum Wage and the rates of pay in all the modern awards will increase by 2.4% from the first full period which commences on or after 1st July 2016.

This means that the new minimum wage will be $672.70, or $17.70 per hour based on a 38 hour week, for a permanent employee. Where the award expresses weekly rates of pay the rate is to be rounded to the nearest 10 cents. In awards expressed as hourly rates, the rates are to increase by a straight 2.4%.

The commission made the following comment in the statement it issued:

“The general economic climate is robust, with some continued improvement in productivity and historically low levels of inflation and wages growth. The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs. The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any negative impact on employment. It will, however, mean a modest improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages.

For employers who operate under modern awards, rates of pay will need to be adjusted to comply with this Decision in time to be compliant by the first pay period from 1st July.

Where there is an enterprise agreement in place, it would be prudent for employers to check and ensure that the rates of pay under the agreement are equal to, or better than, the new increased rates. Also, if an enterprise agreement provides for an automatic wage rise (and potentially, an increase to allowances) that is triggered by the Annual Wage Review, then appropriate adjustments need to be made.