The Fair Work Ombudsman has released a press statement reminding Australian employers that a new National Minimum Wage will come into effect from the first pay period on or after 1 July 2016.
‘Last month, the Fair Work Commission announced a 2.4 per cent increase to the National Minimum Wage, Modern Award wage rates and agreed base rates of pay’. The minimum hourly rate will increase from $17.29 to $17.70.
Fair Work Ombudsman Natalie James said that ‘the agency’s online pay tools can assist employers calculate their new wage rates and ensure they are compliant with their workforce obligations’.
She also added that ‘underpayment of wages detected by Fair Work inspectors can often be traced back to a failure by employers to pass on annual wage rises’.
“If left unchecked for a long period, businesses can ultimately end up with a hefty back-payment bill they were not budgeting for,” she explained.
Cleaners do not receive the National Minimum Wage because they are covered by a Modern Award. Only employees who are not covered by a Modern Award or Enterprise Agreement receive the National Minimum Wage because it is the ‘safety net’ for Award/Agreement-free employees.
All Modern Award rates of pay increase in line with the percentage increase to the National Minimum Wage. This year, the increase was 2.4 per cent. While that means the National Minimum Wage has risen to $17.70 per hour, cleaners must receive the newly increased rates set out in their Modern Award.
Equally as important, cleaners must be assigned to the correct classification level within the Award, so there will be a number of different rates which will be payable depending on their classification.
Here are some of the most commonly-asked questions about the National Minimum Wage as answered by Workforce Guardian:
- Do I need to pass on an increase if I’m already paying a wage/salary that is higher than the newly-adjusted rates?
No, there is no need to pass on the 2.4 per cent increase if employees are already receiving a wage/salary which is higher than the newly-adjusted minimum rates. This is because an above-Award wage can generally ‘absorb’ any increases to the underlying minimum rate of pay.
However, if your employee is covered by a Modern Award or Enterprise Agreement, it’s worth remembering they are also likely to be entitled to receive a wide range of other allowances, loadings and penalty rates. These must always be paid to eligible employees.
- Can I look up the new Award rates now?
Each Modern Award will be updated by the FWC over the next few weeks. Although we know the base rates will rise by 2.4 per cent, the FWC will apply its own rounding to the final figures. You’ll be able to access the updated Modern Awards closer to 1 July. If you’re not sure whether you’re viewing the most recent version of the Award, just check the remarks on the Award’s front page as these confirm the last time the Award was updated.
- My pay cycle overlaps 1 July – do I need to apply a pro-rata increase?
No. The newly-adjusted minimum rates can be applied from the beginning of the first full pay period in your business on or after 1 July.
- Do Award/Agreement-free casual employees still receive a ‘casual loading’?
Yes, these employees must be paid a 25 per cent casual loading.
- I’ve heard penalty rates are being abolished – is that right?
No. The FWC is currently considering a relatively minor amendment to Sunday penalty rates only for employees in the retail and hospitality sectors. The Commission’s decision on this matter will not be made until at least July, and is unrelated to the annual increase to the National Minimum Wage.
For more information on the new National Minimum Wage, have a look at Workforce Guardian’s full article in the upcoming July/August issue of INCLEAN.