The Australia Fair Work Commission’s minimum wage panel decision issued on June 6, 2017, has increased modern award1 minimum wages by 3.3%. The decision also lifts the Australian federal weekly full-time minimum wage from $17.70 per hour ($672.70 per week) to $18.29 per hour ($694.90 per week).

In making its decision, the Fair Work Commission relied upon strong labour productivity and annualized industry profit growth across 2016. The determined increase demonstrates a departure from more recent “modest” annual wage increases, with the Full Bench of the Commission placing a clear emphasis on the need to avoid increasing the vulnerability of Australia’s lowest-paid workers:

The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the National Minimum Wage and modern award minimum wages and an improvement in their relative living standards.

The increase to minimum wages will take effect from the first full pay period that starts on or after Saturday, July 1, 2017.

All employers with workers in Australia should review compensation currently paid to ensure that employees’ base rates of pay meet or exceed the new minimum rates of pay. Businesses that are party to a registered enterprise agreement (or older workplace agreement)2 must ensure that base rates paid under the agreement do not fall below these new minimums.