Annual Wage Review 2011

On Friday 3 June 2011, the Full Bench of Fair Work Australia handed down its Annual Wage Review decision. For the first time in 20 years, the Federal wage-fixing Tribunal handed down a percentage instead of a flat dollar increase.

The increase to modern award minimum wages is 3.4 percent, rounded to the nearest 10 cents, effective on the first full pay period on or after 1 July 2011.

The Full Bench has awarded the same percentage increase to all transitional Australian Pay and Classification Scales and Division 2B State reference transitional awards. This will affect amongst others, employers in industries which in accordance with the transitional arrangements in the relevant modern award, are still only required to pay pre-modern award rates to their employees. Employers in the social, community and disability services industry are an example of employers affected by the decision to increase transitional instruments.

The national minimum wage was also increased to $589.30 per week or $15.51 per hour. This constitutes an increase of $19.40 per week or 51 cents per hour. The hourly rate has been calculated on the basis of a 38 hour week for full-time employees. The national minimum wage applies to all award/agreement free employees. The casual loading for award/agreement free employees has been increased to 22 percent.

All of these increases are effective from the first full pay period on or after 1 July 2011. Employers covered by modern awards will need to ensure that they are complying with the transitional arrangements in those awards.

The decision is likely to affect the majority of allowances in modern awards as those allowances are usually percentage amounts of the standard award rate.

The decision will also affect employers with employees covered by enterprise agreements and those currently negotiating enterprise agreements. That is because employees covered by enterprise agreements must still receive at least the base rate of pay in the relevant modern award and in order for Fair Work Australia to approve an enterprise agreement, it must be satisfied that employees are better off overall under the proposed enterprise agreement than the relevant modern award.

If you require any assistance in relation to the application of this increase to your business please contact National Workplace Lawyers on +61 2 9233 3989. 

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.