GeneralMinimum WagePay and Conditions

Fair Work Commission – Increase to Minimum Wages


The Fair Work Commission (“FWC”) has recently published its Annual Wage Review.

The FWC’s decision will greatly impact many businesses given the current economic climate and struggles faced by companies over the past 12 months. We have set out below the changes and what employers need to know moving forward.

What was the decision?

The FWC have announced:

• The National Minimum Wage will increase to $23.23 per hour, or $882.80 per week based on a 38 hour week.

• There will be a 5.75% increase to minimum modern award wages.

The increase will commence from the first pay period following 1 July 2023.

Interestingly, in its decision, the FWC stated it “placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees to meet their basic financial needs”. The FWC also acknowledged that “inflation is reducing the real value of these employees’ incomes and causing financial household distress”.

Industry groups have expressed concern regarding the decision and what it could mean for businesses already stretched thin by rising energy costs, rent and supply costs. However, on the other hand, Unions have stated the increase was essential for workers and a matter of “survival” given the current cost of living.

Notwithstanding, it is important that if your business has employees covered by modern awards or are receiving the national minimum wage, you prepare for the changes prior to 1 July 2023.

Employers who pay their employees an annual salary must check the salary is now sufficient to meet the increased Award rates. The fact that employees receive an annual salary does not mean they are not covered by a modern award and employers must check to ensure their employees are paid correctly.

Other changes

There are a number of other recent changes employers should be aware of. Specifically, these include:

a. Superannuation

In addition to the above increase, from 1 July 2023, the Superannuation Guarantee increases to 11%. It will continue to increase by 0.5% on 1 July each year until it reaches 12% in 2025.

b. Secure Jobs, Better Pay Changes

As mentioned previously, the Australian Government passed the Fair Work Legislation (Secure Jobs, Better Pay) Act 2022 late last year. This legislation amends the Fair Work Act 2009 (Cth) (“FW Act”) and introduced a range of new or changed workplace laws.

Importantly, a number of the changes came into force from 6 June 2023. These changes are as follows:

• Amendments to the flexible work arrangements provisions

The amendments expands the eligibility to make a flexible work arrangement request by enabling a request to be made where an employee (a) has experienced family and domestic violence; or (b) where the employee is pregnant.

Employers have new obligations before they can refuse a request from an employee for a flexible work arrangement.

The FWC can now hear and make orders about disputes regarding flexible working arrangement requests if the parties can’t resolve the dispute at the workplace level. For example, if an employer refuses an employee’s request, or doesn’t respond to a request within 21 days.

• Simplified Enterprise Bargaining

There are now significant amendments to enterprise bargaining, including the amendment of the BOOT, increased FWC powers to deal with disputes, and the introduction of multi-employer bargaining.

• Pay secrecy clauses

Pay secrecy clauses in employment contracts will be unlawful and unenforceable. Employers who offer contracts with pay secrecy clauses may be subject to significant financial penalties.

The update aims to ensure transparency around pay rates and working conditions.

• Extensions to unpaid parental leave

There are changes to how employers need to respond to requests for extending unpaid parental leave. These new requirements apply to requests for an extension of unpaid parental leave made from 6 June 2023.

In addition, the FWC now has the power to deal with disputes about requests for extending unpaid parental leave, which include arbitration.

c. Increase to Small Claims Division

The monetary cap for employment law claims in the small claims division will be significantly increased from $20,000 to $100,000 from 1 July 2023.

What you need to do as an employer

As a result of the above changes, we recommend that you:

• Check the modern award coverage of your employees;
• Check whether your employees earn award wages or are paid an ‘all up’ salary. If the latter, you should review whether the annual wage being paid still satisfies the requirements of the award;
• If you have an enterprise agreement in place, the rate increase may also affect your employees and as such, you should review the base rate;
• Ensure your payroll system is updated to give effect to the forthcoming increases;
• Review the company’s budget and financial projections to accommodate any wage adjustments;
• Increase the superannuation contribution rate to 11% for all eligible employees from 1 July 2023; and
• Review your employment contracts to ensure that your templates do not contain pay secrecy clauses.

If you require further assistance or information in relation to this client alert, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

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