Modern Award Rates of Pay

From 1 July 2014, minimum rates of pay in modern awards have increased by 3 percent following the annual wage review.

A range of expense-related allowances under the modern awards have also been increased in line with percentage increases to the Consumer Price Index. Other award allowances which are referrable to minimum award rates of pay have naturally increased as a result of the increase in minimum rates of pay.

The increased rates of pay and allowances have been incorporated into the modern awards available on the Fair Work Commission website.

Minimum Wage

The new national minimum wage for a full-time adult is now $640.90 per week or $16.87 per hour. This also affects employees’ entitlements to Government funded paid parental leave, which is calculated by reference to the minimum wage.

Transitional Modern Award Provisions

Modern awards commenced operation on 1 January 2010, which replaced thousands of state and federal industrial awards. However, transitional arrangements were put in place to phase in modern award rates over time, so that rates of pay and certain penalties and loadings under pre-existing industrial awards would slowly transition to those amounts set out under the modern awards.

On 1 July 2014, the transitional provisions under modern awards ceased to apply, and the full pay rates, casual loadings, shift allowances and penalties in modern awards now apply.

However, there are four modern awards where transitional provisions will continue to have effect. These awards are the:

  • Cleaning Services Award 2010
  • Hospitality Industry (General) Award 2010 (South Australian employers only)
  • Registered and Licensed Clubs Award 2010 (South Australian employers only), and
  • Social, Community Home Care and Disability Services Industry Award 2010.

High Income Threshold

In addition to the Commission’s decision to increase minimum wages from 1 July 2014, the “High Income Threshold” has also increased from $129,300 to $133,000.

The change in the High Income Threshold affects various provisions of the Fair Work Act, including:

  • Employees who are not covered by an award or an enterprise agreement who earn above the Threshold are ineligible to commence unfair dismissal proceedings.
  • For those employees who are eligible to commence unfair dismissal proceedings, the maximum compensation available is a maximum of either 26 weeks’ pay, or half the amount of the Threshold ($66,500), whichever works out to be lower.
  • The Threshold determines which employees may be offered a “guarantee of annual earnings”. For employees who earn above the Threshold, employers may offer those employees a guarantee that their earnings will exceed the Threshold for a particular period of time, with the result that no modern award will apply to them during that time.