The Fair Work Commission (FWC) Expert Panel has handed down the 2022 Annual Wage Review decision, granting a 5.2% increase to the national minimum wage and a 4.6%, or a minimum of $40 per week, increase to modern award minimum wages.
The weekly national minimum wage (NMW) will increase by $40 to $812.60 per week and the hourly minimum wage will increase by $1.05 to $21.38 per hour.
In determining a proportional increase to modern awards, the FWC Expert Panel determined that wages contained within modern awards that are above $869.60 per week will be increased by 4.6%, with rates below this figure to be adjusted by $40 per week.
The ACTU had initially sought a 5% increase, however raised its claim to 5.5% due to the increase in consumer prices, while employer groups had sought an increase of between 2.5% to 3%. The Albanese Labor Government, following its election to government in light of the 2022 Federal Election, submitted to the FWC that the increase should match the 5.1% consumer price inflation rate.
The FWC Expert Panel stated that the level of increase proposed by employer bodies would result in real wage reductions for award reliant workers.
Timing of the Adjustments
Last year, the FWC Expert Panel determined that the 2.5% increase would apply to the vast majority of modern awards from 1 July 2021, with the exception of:
- the General Retail Industry Award 2020 which came into effect on 1 September 2021; and
- a number of modern awards in the aviation and tourism sectors, the Fitness Industry Award, Restaurant Industry Award and certain retail trade sector (e.g. hair and beauty) which came into effect on 1 November 2021.
This year, the FWC Expert Panel determined that the 4.6% increase would apply to a majority of modern awards from 1 July 2022, with the exception of modern awards in the aviation, tourism and hospitality sectors. The variation to modern awards within these industries will not be operative until 1 October 2022.
What does this mean for employers?
- Employers covered by modern awards or with employees receiving payments based on the NMW will need to review their arrangements to ensure that employees are paid correctly.
- For the vast majority of awards, the 4.6% wage increase comes into effect on 1 July 2022, in line with the 0.5% increase to the superannuation guarantee rate.
- Employers covered by an enterprise agreement that refers to the Annual Wage Review will need to review the remuneration paid to their employees to ensure they remain compliant with the terms of that enterprise agreement.
If you would like further information regarding the Annual Wage Review and what it means for your business, please get in touch with the Employment team at McCabes.