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Fair Work Commission minimum and award wage increase – cost of living fire blanket for workers or inflationary fire accelerant for business? – Employee Benefits & Compensation


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The Fair Work Commission Expert Panel on Annual Wage Reviews has
handed down its decision to raise the national minimum wage and
modern award minimum wages by 5.2%.1

Under s.285(1) of the Fair Work Act 2009 (Cth), the
Expert Panel is required to “conduct and complete an
annual wage review in each financial year

This year the Expert Panel took into consideration submissions
from the newly elected Australian Government, most state
governments, and a wide range of industry, employer and employee
bodies. Also pertinent to decision making were key economic
indicators such as labour market performance, inflation and cost of
living. As a result, the Expert Panel has awarded an increase of
$40 to the national minimum wage, which amounts to 5.2%. The
national minimum wage will sit at $812.60 per week, or $21.38 per
hour, from 1 July 2022.

While employee bodies such as the Australian Council of Trade
Unions and the Australian Catholic Council for Employment Relations
proposed increases well beyond 5.2%, submissions from employer
groups such as the Australian Chamber of Commerce and Industry and
Australian Industry Group suggested an increase of between 2.5-3%,
if at all.

Employer submissions included that a wage increase would
intensify the cost burden for businesses and risks in the current
uncertain economic environment.

Included in the Australian Government’s submission was that
a wage increase would “ensure that the real wages of
low-paid workers do not go backwards”
. Reassurance was
also provided that the Australian economy is exhibiting a strong
recovery from the impact of the COVID-19 pandemic, notably
evidenced by falling unemployment and underemployment rates.

The Expert Panel’s decision noted that “changes in
the economic context weigh in favour of an increase in the national
minimum wage and modern award minimum wages
” and so
determined that a 5.2% increase “will protect the real
value of the wages of the lowest-paid workers

Realistically, the $40 per week increase, based on a 38-hour
week for a full-time employee, will mean a 4.6% adjustment for
modern award minimum wage rates currently above $869.60 per week,
and a $40 per week adjustment for rates below $869.60 per week.

It is important to note that the increase will have a delayed
operative date (1 October 2022) for the following awards, due to
“exceptional circumstances” in those industries:

  • Aircraft Cabin Crew Award 2020

  • Airline Operations – Ground Staff Award 2020

  • Air Pilots Award 2020

  • Airport Employees Award 2020

  • Airservices Australia Enterprise Award 2016

  • Alpine Resorts Award 2020

  • Hospitality Industry (General) Award 2020

  • Marine Tourism and Charter Vessels Award 2020

  • Registered and Licensed Clubs Award 2020

  • Restaurant Industry Award 2020.

What does this mean for employers?

With the exception of employers whose workforces are covered by
the Awards listed above, this means that employers will need to
conduct reviews on the wages and rates of their enterprise
agreement covered employees in the next 2 weeks. This is to ensure
that employees will not be paid below the award and national
minimum wage from 1 July 2022. There are consequences for not doing
so which vary in degree.

Employers should be aware that award wage increases will
influence collective bargaining claims, as the assessments under
the “Better Off Overall Test” will now need to meet
higher minimum award rates. There is also a view that it could
intensify wage increase expectations in a high unemployment and
high inflationary environment.

Given that 1 July 2022 is also the time for the 0.5% increase in
the Superannuation Guarantee rate, this means salary packaging
arrangements in contracts of employment (including how
superannuation is treated as an exclusive on-cost or inclusive
remuneration component), may need to be carefully reviewed. This is
in addition to ensuring offset arrangements provide adequate

Getting your contract structures, wages and rates right can
mitigate your legal risks and significantly help reduce unnecessary
future costs.

As the Expert Panel itself acknowledged, the recent
sharp rise in inflation impacts business and
” alike. The minimum wage increase may offer a
fire blanket against costs of living pressures for the lowest-paid
workers in Australia. It may also add fuel to the inflationary
fire, where businesses are under strain with increases in material
and energy costs, interest rates, supply chain disruptions and
labour skill shortage induced wage cost pressures.


1 Annual Wage Review 2021-22 [2022] FWCFB

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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