The Fair Work Act 2009 requires the Fair Work Commission’s Expert Panel to conduct and complete a review of the national minimum wage (NMW) and minimum wages in modern awards in each financial year.
On 1 June 2018 the Panel issued its decision in the 2017–18 Annual Wage Review. The full Review can be read here.
The Panel stated that the number of employees who have their pay set by an award is estimated to be 2.3 million or 22.7 per cent of all employees. The proportion of employees that are paid at the adult NMW rate is estimated to be 1.9 per cent. Further, a significant number of employees are paid at junior or apprentice/trainee rates based on the NMW rate.
The Panel’s decision will also affect employees paid close to the NMW rate and modern award rates, and those whose pay is set by a collective agreement which is linked to the outcome of the Review.
Here we give a summary of the key outcomes.
The national minimum wage to increase by 3.5%
The Panel decided it was appropriate to adjust modern award minimum wages. From the first full pay period on or after 1 July 2018, minimum weekly wages are increased by 3.5 per cent, with commensurate increases in hourly rates on the basis of a 38-hour week.
The increase applies to modern award minimum wages for junior employees, employees to whom training arrangements apply, and employees with disability. It will also apply to piece rates through the operation of the methods applying to the calculation of those wages.
Details of the national minimum wage order
The NMW order will contain:
- A national minimum wage of $719.20 per week or $18.93 per hour -- this constitutes an increase of $24.30 per week to the weekly rate or 64 cents per hour to the hourly rate.
Two special national minimum wages for award/agreement free employees with disability:
- for employees with disability whose productivity is not affected, a minimum wage of $719.20 per week or $18.93 per hour based on a 38-hour week; and
- for employees whose productivity is affected, an assessment under the supported wage system, subject to a minimum payment fixed under the Supported Wage System Schedule.
Wages provisions for award/agreement free junior employees based on the percentages for juniors in the Miscellaneous Award 2010 applied to the national minimum wage;
Apprentice wage provisions and the National Training Wage Scheme in the Miscellaneous Award 2010 for award/agreement free employees to whom training arrangements apply, and a provision providing transitional arrangements for first-year award/agreement free adult apprentices engaged before 1 July 2014.
A casual loading of 25 per cent for award/agreement free employees.
You can find more information on each of these below.
Supported Wage System Schedule
The adjustment will flow through to employees with disabilities through the operation of the Supported Wage System Schedule and that the minimum payment in the SWSS will be adjusted consistent with the approach adopted in previous reviews.
National Training Wage Scheme
Wages in the National Training Wage Scheme will be increased by 3.5 per cent.
In relation to transitional instruments, from the first full pay period on or after 1 July 2018, wages in those instruments will be varied by 3.5 per cent per week, with commensurate increases in hourly rates based on a 38-hour week. Copied State awards will be varied on the basis discussed in Chapter 5 of the Panel's decision. See Chapter 5 here.
Changes to casual loading
While the casual loading in modern awards will remain at 25 per cent, the casual loading in the Business Equipment Award will be increased to 23 per cent. The Panel expects that the casual loading in this award will be increased by 1 per cent in subsequent Reviews, until it reaches 25 per cent.
Rounding of weekly wages and determinations for modern awards
Weekly wages in the NMW order and modern awards will be rounded to the nearest 10 cents and hourly wages will be calculated by dividing the weekly rate by 38, on the basis of the 38-hour week for a full-time employee.
The determinations necessary to give effect to the increase in modern awards will be made available in draft form shortly.
The 2018-19 Review
The timetable for the 2018–19 Annual Wage Review will be announced in the third quarter of 2018.