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Are you up to date with the minimum wage?

Practitioners are reminded of the necessity to review wages being paid to staff on a regular basis.

This is particularly important at the commencement of the new financial year for award-covered staff. The Fair Work Commission sets a minimum wage for private sector employees, which is subject to any applicable industrial award. In the legal services industry, this is the Legal Services Award 2020.

The Fair Work Commission minimum wage panel handed down its Annual Wage Review decision on 15 June and unanimously decided to:

  • increase the National Minimum Wage by $40.00 (5.2%) a week
  • increase all modern award rates by 4.6% with a minimum increase of $40.00 a week for weekly minimum wage rates below $869.60 a week.

The Fair Work Commission:

  • decided to provide a proportionately higher increase to low-paid employees whilst seeking to constrain inflationary pressures
  • noted the most significant changes since last year’s review have been the sharp rise in the cost of living and the strengthening of the labour market
  • considered the increases would not have a significant adverse effect on the performance and competitiveness of the national economy
  • acknowledged that there might be a real wage cut for some award-reliant employees which could be addressed in later reviews.

This means that the federal weekly minimum full time wage increased from 1 July 2022 by $40 a week to $812.60 a week ($21.38 per hour) from $772.60 ($20.33 per hour).

Increases to the minimum rates contained in the Legal Services Award 2020 took effect from the start of the first full pay period on or after 1 July 2022. Award increases for those employed in the aviation, tourism and hospitality sectors will be delayed until 1 October 2022 due to last year’s award increase taking place later in the year.

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A summary of the Fair Work Commission’s decision is available at fwc.gov.au/documents/wage-reviews/2021-22/decisions/2022-fwc-3501-summary.pdf. Employers should check the Fair Work Commission website for pay rate revisions to the Legal Services Award 2020 at fwc.gov.au/agreements-awards/awards/find-award.

Employers and employees can also subscribe to electronic award updates from the commission. The Fair Work Ombudsman also has online pay checking resources – fairwork.gov.au/pay-and-wages.

Remember that employees cannot be paid less than required by an applicable modern award (including overtime, penalty rates and allowances). It is only trainees, apprentices and junior employees, employees to whom training arrangements apply and employees with a disability who may be paid less than these minimum rates, and then only if specified in an applicable award or enterprise agreement.

For non award employees, the obligation is for employers to ensure that an employee is being paid more than the minimum wage rate for all their hours of work.

Care needs to be taken in relation to annualised wage and common law salary arrangements to ensure they comply with award and legal requirements. A failure to apply the minimum wage increase can result in a claim for back pay (covering up to the last six years) and the imposition of a penalty for breaching the industrial award (up to $13,320 for individuals and $66,600 for corporations per breach) and also has potential professional conduct implications. Higher penalties (up to $133,200 for individuals and $666,000 for companies) are payable for certain serious contraventions.

Also, from 1 July 2022, the compulsory employer Superannuation Guarantee rate will increase from 10.0% to 10.5%.

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The other change that occurs each year from 1 July is an adjustment in the income level for statutory unfair dismissal claims which may be relevant when considering terminating the employment of a professional staff member.

This year, the unfair dismissal high income threshold has increased to $162,000 (excluding superannuation and non-guaranteed amounts, for example, bonuses) from 1 July and the maximum compensation available for unfair dismissal increased to $81,000.

This reinforces the importance for employers of making a decision whether to retain an employee before the deemed statutory probation period (called the minimum employment period”) ends. This period is 12 months for employers with less than 15 employees and six months for those employers with 15 or more employees. These periods cannot be extended, even by agreement.

Rob Stevenson is the Principal of Australian Workplace Lawyers and a QLS Senior Counsellor. rob.stevenson@workplace-lawyers.com.au.

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