An estimated 2.3 million employees are set to see a pay rise following the release of the Fair Work Commission’s (FWC) Annual Wage Review on 1 June 2018. Employees paid the National Minimum Wage (NMW) will see an increase of $24.30 per week or 3.5% in wages. The NMW will increase from $694.90 to $719.20 per week, or $18.29 to $18.93 per hour. This is an increase of 64 cents per hour and represents a further increase on the 3.3% rise awarded last year. The minimum wage rates contained in modern awards have also been increased by 3.5%, with casual loading remaining at 25%.

The FWC’s Expert Panel highlighted strong economic growth as a factor for the significant increase, with economic indicators now pointing “more unequivocally to a healthy national economy and labour market”. The Panel concluded that the “prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid”, however, the increase will not “lead to undue inflationary pressure and is highly unlikely to have any measurable negative impact on employment”.

The changes will come into effect on 1 July 2018. What does this mean for employers?

  • Employers paying employees the NMW or in accordance with a modern award will need to increase wages from 1 July 2018.
  • Employers who currently pay slightly above the NMW or relevant modern award rate will need to reassess their employees’ salaries or wages to ensure they remain above the new rates.
  • Employers covered by a collective agreement that refers to the Annual Wage Review will need to review the remuneration paid to their employees to ensure they remain compliant with the terms of that collective agreement.