On 4 June 2014, the Fair Work Commission’s Minimum Wage Panel (MWP) handed down its fifth annual wage review under the Fair Work Act 2009 (Cth).

The outcome of the review is that from 1 July 2014:

  • modern award minimum wages will increase by 3%;
  • the National Minimum Wage will increase to $640.90 per week (upfrom$622.20 per week) or $16.87 per hour (up from $16.37 per hour).

In coming to its decision, the MWP cited a number of factors as favouring an increase in wages including a sound economic outlook, sustained growth in labour productivity, and relative inequality in living standards of award-reliant workers and the needs of the low paid.

The MWP considered submissions put forward by a wide range of parties, including the Australian and state governments, collective bodies representing employees and employers and other private organizations and individuals.  The MWP stated that the views of the parties were significantly divided regarding the quantum and form of any increases to modern award minimum wages and the national minimum wage.  

What does this mean for employers?

In practical terms, the decision of the MWP means that employers who pay their employees at minimum wage rates pursuant to a modern award, the National Minimum Wage or other industrial instrument, will be required to increase their employees’ pay in the first pay period on or after 1 July 2014.  Employers who pay their employees above the minimum rates of applicable modern awards or other industrial instruments may be able to absorb the increases without making any changes.