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Increase to award wages and allowances

By Kristin Ramsey07 Jun 2012

For those of you who missed it, Fair Work Australia’s minimum wage panel handed down its annual wage increase decision late last week and in doing so increased the:

  • federal minimum wage and minimum award wages by 2.9%, which brings the federal minimum wage to $15.96; and
  • casual loading for non-award covered employees to 23%.

These increases, together with the increases to expense base allowances (which increase annually based on the relevant CPI group), take effect from the first pay period following 1 July 2012.

With less than one month to go before the new financial year commences and increased rates kick in, businesses will need to act quickly to review existing wage rates and salary arrangements to ensure that from 1 July 2012 wages being paid to staff are equal to or higher than the relevant rate under the applicable award (or otherwise the federal minimum wage).

For businesses that pay 'all up' hourly rates or otherwise remunerate staff on a salaried basis, now is also a good time to review pay rates to ensure that when such rates are broken down employees are not being disadvantaged under the relevant award.

Where wage rates and allowances need to change to take into account the increases, businesses will also need to consider whether a written variation needs to be made to the employment contract.

Businesses who fail to pass on the necessary increases or are found to be underpaying staff risk prosecution and penalties of up to $33,000 per employee (not to mention the possibility for personal liability for managers involved in the company’s contravention).

We can assist clients with reviewing their current wage rates and arrangements and providing advice on any necessary increases as well as any changes to employment documentation.

Now might also be a good time to consider an audit of the businesses’ human resources practices and employment arrangements to ensure that the business is complying with its legislative obligations and is not exposed to any unintended risks. More details on our service offering in this area can be accessed here.