How will the minimum wage increase affect your business?

Wednesday June 24, 2020

Each year, the Fair Work Commission conducts a minimum wage review which covers many Australian employees. This year, the review was complicated by the impact of COVID-19 on the entire economy – especially small business owners.

In fact some submissions to the Commission argued any wage increase should be delayed for another 12 months. However the minimum wage review also requires a balanced response to protect the interests of employees who have also suffered financially through reduced working hours, voluntary wage reductions and job losses.

In some sectors, COVID-19 (and to some extent the bushfires) have created greater demand for services – particularly in the areas of frontline healthcare, social assistance, teaching and other essential workers.

In a media release from the Attorney-General and Minister for Industrial Relations, Christian Porter, it stated “No-one could begrudge workers a fair pay rise, especially the lowest paid, but the decision represented a difficult balancing exercise against the necessity to protect businesses at their most vulnerable time from increased costs that can decrease employment.

Mr Porter went on to say, “This is an annual wage review unlike any we have seen before and is one which reflects the unique circumstances facing the Australian economy”.

The Fair Work Commission tries to find a middle ground

The Fair Work Commission has decided to stagger the national minimum wage increase. With a level that’s slightly below inflation, the 1.75% wage increase means:

  • The minimum hourly rate will increase to $19.84 per hour (previously $19.49 p/h)
  • The minimum weekly wage will increase to $753.80 per week (up from $740.80 p/w)

Importantly, implementing the minimum wage increase will be staggered across industries. As a result:

  • On July 1, Group 1 Awards will be increased. These include industries such as frontline health workers, social assistance workers, teachers, childcare workers and workers in other essential industries such as funeral, cleaning and banking.
  • On November 1, Group 2 Awards will be increased. These include workers in the construction, manufacturing, security services and allied industries.
  • On 1 February 2121, Group 3 Awards will be increased. This group has been the most significantly affected by COVID-19 restrictions and includes hospitality, aviation, retail, tourism and personal services workers.

What this means for your business

First and foremost, you need to review all staff enterprise agreements, above award rates or annualised salary arrangements to ensure employees are receiving at least the minimum wage (taking into account the minimum wage increase). You’ll also need to determine which staff, if any, are affected by each of the Award Groups. This process can be complicated so the HR Dept is here to help you.

Next, for all employees who are paid a minimum wage, you will need to implement the wage increase in the first pay period on or after 1 July or 1 November or 1 February – depending on the Award Group that applies to them.

These are testing times for business owners, their management teams and staff but help is only a phone call away. We can provide a range of support services to help you navigate the complexities of managing your people, and their wages. To discover more, contact us today.


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