Edge Legal
Peak union body the ACTU has indicated it will pursue a 5% increase across all award rates in this year’s minimum wage review, citing the need to compensate workers for cost of living pressures. If approved, this would be a marked increase on last year’s 2.5% increase. By contrast, the Australian Business Industrial and the NSW Business Chamber has called for the FWC to award minimum pay rises of 2.5% to 3% to help maintain living standards amid rising inflation, albeit with pay rises delayed for industries hardest hit by the pandemic.
If the ACTU's claim is successful the Federal minimum wage will increase from $20.33 per hour to $21.35 per hour or $42,184.00 per year.
The ACTU maintains that the average worker had a real wage cut of $800.00 in 2021, with budget projections showing their wages will "go backwards" by an average of $500 in the first half of this year.
The changes are likely to cause some uncertainty for employers, who will need to make sure the minimum wage increase doesn’t render them non-compliant overnight with employees minimum entitlements under other instrument ‘not keeping up’.
Employers should consider using an enterprise agreement to remove uncertainty, but also need to be aware that we expect unions to put increase bargaining pressure on wages. Of course, section 206 of the Fair Work Act says that an enterprise agreement cannot contain a base rate of pay lower than the modern award rate or the national minimum wage order, and that where this is the case the agreement applies as though it contains the minimum award rate. This means even an enterprise agreement won’t be a ‘silver bullet.’
If there is no enterprise agreement in place, then employers need to ensure set-off provisions are correctly drafted to ensure that above-award payments are correctly apportioned to award entitlements.
