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Perspective

National Minimum Wage increase reflects rosy view of economic recovery

Mathew Reiman
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The Fair Work Commission has approved a 2.5% increase to the National Minimum Wage in a decision which acknowledged a better-than-expected economic recovery after the initial significant economic impact of the COVID-19 pandemic.

Reflecting an optimism about Australia’s economic situation, the FWC acknowledged the prevailing dire economic circumstances considered in their 2019-20 minimum wage decision had been replaced by a “broad consensus” that the Australian economy had recovered to a greater extent and more quickly than anticipated.

The national weekly minimum wage will now be $772.60 and the hourly rate $20.33.

The increase was greater than the 1.75% increase approved last year which was based on the significant economic downturn which was predicted would arise out of the onset of the COVID-19 pandemic.

Unions had sought a 3.5% increase while employer groups had argued for a freeze or an increase in line with cost-of-living increases, estimated to be approximately 1.75%.

Award-free employees will receive the increase on 1 July 2021 along with most Award covered employees.

The FWC did delay the increase under some Awards, acknowledging certain industries have not yet fully recovered from the commercial impact of the COVID-19 pandemic and government restrictions.

The FWC delayed the increase under the General Retail Award until 1 September 2021. Another 20 Awards including those applying to tourism, aviation and fitness will have the increase delayed until 1 November 2021.

It is important for all employers to ensure they are up to date with the timing of the increases for employees under the Awards which apply to their businesses. A failure to increase the hourly rates for employees in accordance with the minimum wage increase may expose an employer to breaches of the Award and Fair Work Act 2009 (Cth).

If employers have Award-free or Award covered employees who are paid an all-inclusive salaried rate of pay, care should be taken to carefully consider the clauses in the respective employment agreements to determine whether it is necessary to provide an increase to the employee’s salary given the minimum wage increase.

Mathew Reiman
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