The Employment Relations team report on the Fair Work Commission’s Expert Panel’s annual wage review that came into effect on 1 July 2015.
Minimum wage increase
On 2 June 2015, the Fair Work Commission’s Expert Panel for annual wage reviews (the Panel) announced a 2.5% increase to minimum wages. The wage increase came into effect from the first full pay period starting on or after 1 July 2015.
Every financial year the Panel conducts a review of the federal minimum wage and minimum wages in modern awards.
The Panel received submissions from both federal and State governments, the Federal Opposition, and organisations representing employers and employees. The Australian Chamber of Commerce and Industry proposed an increase of not more than $5.70 per week to the federal minimum wage, whereas the Australian Industry Group proposed a 1.6% increase, which represented a $10.25 per week increase. The Australian Council of Trade Unions proposed a $27 per week increase.
Ultimately, the Panel decided to increase the hourly minimum wages by 2.5%, raising the hourly federal minimum wage from $16.87 to $17.29 and the federal minimum weekly wage, based on a 38 hour work week, from $640.90 to $656.90.
Further, minimum award rates of pay will also increase by 2.5%. Employers will need to review their pay rates for award covered employees, in order to ensure that rates of pay are compliant with the new rates.
The 2.5% increase is less than the 3% increase given last year. President Iain Ross stated that this was due to a number of factors, the most significant of which was low inflation and reduced aggregate wages growth.
High income threshold
In addition to the Panel’s decision to increase minimum wages from 1 July 2015, the “High Income Threshold” will also increase from $133,000 to $136,700.
The change in the High Income Threshold affects various provisions of the Fair Work Act, including:
- Employees who are not covered by an award or an enterprise agreement who earn above the Threshold are ineligible to commence unfair dismissal proceedings.
- For those employees who are eligible to commence unfair dismissal proceedings, the maximum compensation available is a maximum of either 26 weeks’ pay, or half the amount of the Threshold ($68,350), whichever works out to be lower.
The Threshold determines which employees may be offered a “guarantee of annual earnings”. For employees who earn above the Threshold, employers may offer those employees a guarantee that their earnings will exceed the Threshold for a particular period of time, with the result that no modern award will apply to them during that time.