Minimum Wage Rise, Modern Awards and Transitioning

posted by Employment Innovations on April 27th, 2012  Posted in News

The Australian Council of Trade Unions (ACTU), has called for a $26 rise in the minimum wage and 3.8% pay rise for other award-reliant workers in it’s wage review submission released last month. ACTU secretary Jeff Lawrence argued that, “one in six workers can barely meet the cost of living let alone live comfortably in an economy that is the envy of the developed world”. Lawrence believes that while the National Minimum Wage(NMW) more or less kept pace with overall wage growth in the early 2000s, low-paid workers have lost ground under Work Choices and now it is time to make up for it.

On the other hand, the Australian Chamber of Commerce and Industry (AACI) is proposing that any increase in the minimum wage be limited to $9.40, with exemptions for those industries impacted by the strong Australian dollar. AACI also wants no wage increase for workers above the minimum wage. As AACI states, “the Annual Wage Review is not just about wage increases and the cost of living but also about jobs, the performance of the national economy, and business competitiveness and viability”.

Each year the Minimum Wage Panel of Fair Work Australia (FWA) undertakes a review of the minimum rates of pay in modern awards and the federal minimum wage, with a decision in June and any changes made to rates of pay coming into effect from the first full pay period on or after July 1 each year.

Modern Awards were introduced on 1 January 2010 and were created to establish one set of minimum conditions for employers and employees who work in the same industries across the country. To lessen the immediate impact of wage increases associated with the introduction of Modern Awards, most contain transitional provisions which allow for the transitioned amount between relevant pre-modern awards and the Modern Award to be progressively phased in over five annual instalments at 20% per year from 2010 to 2014. July 2012 marks the third phase of transitioning from pre-reform to Modern Awards.

The method for calculating the transitional amount can be complicated In the third phase of transitioning, 40% of the transitional amount is added to or subtracted from the new Modern Award rate which applies from the first full pay period commencing on or after 1 July 2012.

If a business is covered by a workplace agreement, wage increases may be determined within the Agreement; but in any event must meet at least the base rate under the relevant Modern Award that would otherwise apply.

Transitioning is a very complex area and if you need more information regarding the relevant pay rates and Modern Award/s your business would be covered by contact us on (02) 8030 8888.

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