MINIMUM PAY RATES UNDER MODERN AWARDS AND THE NATIONAL MINIMUM WAGE INCREASED FROM 1 JULY 2016. THE HIGH INCOME THRESHOLD ALSO INCREASED FROM 1 JULY 2016.
ISSUE
The Fair Work Commission’s (FWC) annual wage review decision of Annual Wage Review 2015-16 [2016] FWCFB 3500 is now operative.
The high income threshold also increased to $138,900 with effect from 1 July 2016.
OUTCOME
The FWC determined that the minimum rates of pay are increased by 2.4% with effect from 1 July 2016. This means that:
- The national minimum wage is increased to $672.20 per week, or $17.70 per hour. (This constitutes an increase of $15.80 per week to the weekly rate or 41 cents per hour to the hourly rate.)
- The minimum pay rates in modern awards is increased by 2.4% from the first full pay period after 1 July 2016.
The casual loading for award/agreement free employees will be maintained at 25 per cent.
IMPACT
The FWC’s annual wage review decision directly affects over 1.86 million employees in Australia who are reliant upon minimum rates of pay.
The national minimum wage applies to those employees who are not covered by an award or enterprise agreement.
For award-covered employees, where employers pay their employees an “all-up” rate or annualised salary in satisfaction of all award entitlements (and the pay rate or annual salary sufficiently exceeds those award entitlements), the employer will not be required to increase the pay rate or annual salary by 2.4%. The 2.4% increase may be absorbed by any already existing above award payments.
Where an employer pays an employee an “all-up” rate sufficiently above the relevant award minimum, absent a requirement to do so under any applicable enterprise agreement, employment contract, or other binding instrument, any increase will be a matter for negotiation between the employer and employee.
The high income threshold (now increased to $138,900) is principally relevant to the issue of whether an employee is able to make an unfair dismissal claim and when they can, it imposes a cap on potential compensation. Where an employee earns above the high income threshold, and they are not covered by an award or enterprise agreement the employee may not pursue an unfair dismissal claim against their (previous) employer.
CONTACT
Whitehall Workplace Law
Level 14, 330 Collins Street, Melbourne, VIC 3000
