I read an article where the RBA Governor commented, ‘The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s. In April, total hours worked declined by an unprecedented 9 percent and more than 600,000 people lost their jobs, with many more people working zero hours. Household spending weakened very considerably and investment plans are being deferred or cancelled…the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy.’
How does it affect your businessLet’s take a look at the changes and how they will affect your business. As a result of the national minimum wage review, if the Fair Work Commission considers your industry to be one of those that is less affected by the COVID-19 pandemic, the increase will be implemented on the first full pay period after 1 July 2020.
Otherwise, the minimum wage increase will be implemented on either the 1 November 2020 or the 1 February 2021, depending on the degree of impact the Fair Work Commission considers COVID-19 has had on that particular industry.
Employers who are not covered by any modern award, the ‘National Minimum Wage’ will increase by 1.75%. This means a rise from $740.80 per week or $19.49 per hour up to $753.80 per week or $19.84 per hour from 1 July 2020. This is $13.00 more per week or 35 cents per hour to the hourly rate.
There will be three groups, with the 1𝘴𝘵 𝘎𝘳𝘰𝘶𝘱 of Awards increases commencing from 1 July 2020, the 2𝘯𝘥 𝘎𝘳𝘰𝘶𝘱 from 1 November 2020 and the 3𝘳𝘥 𝘎𝘳𝘰𝘶𝘱 from 1 February 2021.
Group 1 Awards: 1 July 2020The first group of awards will increase by 1.75% and will start on the first full pay period on or after 1 July 2020. The awards that fall into this group are listed below:
Healthcare and social workers
Teaching and Childcare
Other essential services
Group 2 Awards: 1 November 2020The modern award minimum wages in the awards listed below will be increased by 1.75% from the start of the first full pay period on or after 1 November 2020.
Group 3 Awards: 1 February 2021The modern award minimum wages in the awards listed below will be increased by 1.75% from the start of the first full pay period on or after 1 February 2021 for the hardest it industries.
Who will be entitled to the increase?Employees who work in industries covered by an award or registered agreement will be entitled to the increased minimum wage rates. The minimum wage increase will also include penalty rates and allowances in their award or agreement. As per the Fair Work Ombudsman, these pay rates may be higher than the National Minimum Wage.
As a result of the increase, employees who are under the age of 21 and receive junior rates, will also be entitled to a percentage of the increase. You can use the Fair Work Pay Calculator to help you calculate the new minimum wage rate for these employees.
If you’re an employer paying above the new minimum wage, the increase will not apply to you and your employees. The fair work commission has come up with the 3 groups to recognise that the pandemic might have impacted different industries in different ways.
Get in touchThe information contained in this blog is general in nature. If you are unsure about how these changes apply to you, feel free to contact us at VeiraMal Consulting. Our HR consultants will be happy to conduct a pay audit to prepare your business for these changes.
VeiraMal Consulting offers a wide range of HR advisory services and packages to both employers and employees. You can view all our services and packages here.