Minimum wages are set to increase by 3.4% following a decision handed down by the Fair Work Australia Minimum Wage Panel (Panel) last Friday. The increase will apply from 1 July 2011.

The increases set out in the Panel's decision are:

  • an increase of 3.4% to all modern award minimum weekly wages;
  • an increase of $19.40 per week ($0.51 per hour) to the National Minimum Wage bringing the minimum weekly rate for award/agreement free employees to $589.30 per week ($15.51 per hour); and
  • an increase in the casual loading for all award/agreement free employees to 22%.

The increases will flow through to junior employees, employees to whom training arrangements apply, employees with a disability, and employees who are paid piece rates.

All remaining transitional instruments, including enterprise instruments and Division 2B State enterprise awards, will be varied to reflect these changes with certain exceptions.

The Panel's decision follows submissions made by various parties to the Panel, including the Australian Government, employer associations and Unions, with suggested increases ranging from $9.50 per week to $28 per week.

According to the Panel, the increase is appropriate in the current economic circumstances. It said that despite the negative impacts of the recent natural disasters, the economy is performing reasonably well. It was on this basis that the Panel refused requests that the increase be delayed for employees affected by the floods and Cyclone Yasi.

Employers who pay employees at minimum wage rates pursuant to a modern award, the National Minimum Wage or other instrument, will be required to increase employees' pay on 1 July 2011. Employers who pay their employees above the minimum rates in applicable modern awards or instruments may be able to absorb the increases without making any changes.