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The Fair Work Commission (“FWC”) has today handed down its Annual Wage Review Decision under the Fair Work Act 2009 (Cth) (“Act”).1 The National Minimum Wage will increase by 1.75% from July. Award wages will also be increased by 1.75%, but the operative dates for award increases will be staggered according to three groups determined by FWC. Many Awards will have a delayed operative date.
Unique circumstances accepted

A summary of the decision – and the full decision – can be found on the FWC website.

The FWC considered that the impact of the COVID 19 pandemic warranted a unique approach. The panel accepted that the adverse impact was significant, but that the effects were being experienced unevenly across segments of the economy and labour market.

The FWC has decided to apply a consistent wage increase percentage across the safety net system – but to apply differential operative dates for the increase according to three groups of awards: Group 1 – industries and sectors less affected by the pandemic, and essential services. Group 2 – industry sectors adversely impacted by the pandemic, but not to the same extent as the sectors covered by the Group 3. Group 3 – industry sectors which have been most adversely affected by the pandemic. Increases to Modern Awards and Transitional Instruments

Percentage increase

The FWC has adopted a uniform percentage increase of 1.75%. This increase will be applied to the minimum rates for each Award level. This increase will apply to all Modern Awards, and any transitional instruments that are still in operation. (If any of your employees are covered by a copied State instrument – because of a transfer of business from a former state public sector employer – you will need specific advice about how the decision affects that instrument, as there are special provisions.)

Weekly wages in Modern Awards will be rounded to the nearest 10 cents. To obtain an hourly rate, you must use the new weekly (rounded) rate and divide by 38, unless that Award specifies another method.

Operative date of increase

Employers will need to refer to the decision or the summary to determine whether their award fits into Group 1, 2 or 3. The 1.75% increase will apply from the start of the first full pay period on or after the following dates:

– Group 1 Awards – 1 July 2020
– Group 2 Awards – 1 November 2020
– Group 3 Awards – 1 February 2021

National Minimum Wage

The national minimum wage will be increased to $19.84 per hour, or $753.80 per week. This rate has been calculated on the basis of a 38-hour week for a full-time employee. The national minimum wage order will also contain specific provisions for award/agreement free employees: with a disability; who are junior employees; or who are apprentices or employees to whom training arrangements apply. A casual loading was maintained at 25% for award/agreement free employees and in the Modern Awards.

Effect of Decision

These changes affect the minimum rates only. If you are paying an over-award rate, you may be able to absorb the increase into any over award payments. We recommend that you seek advice before making a decision to absorb the increase.

The increase may also affect employers covered by enterprise agreements or transitional agreements if they are expressly linked to an Award rate, or where the minimum base rate of pay in the agreement falls below the equivalent minimum base rate in the Award. Again, we recommend that you seek advice about your obligations.

Next Steps

Draft variation determinations giving effect to the decision will be published today. Interested parties will be required to submit any corrections of amendments by no later than 5pm on Thursday, 25 June 2020, after which the final wage rates for each award will be published.
Require further information/assistance? If you require further information or advice, please contact one of our consultants.

1 Annual Wage Review 2019–2020 [2020] FWCFB 3500 (19 June 2020).
 
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