Employers Beware! – Minimum Wage increases take effect tomorrow
When you need almost ten dollars to buy a lettuce from Coles and with staff shortages in many parts of the economy, it is hard to ignore the signs of inflation. Employers need to be aware that minimum wage increases take effect from tomorrow.
National Minimum Wage increase
The Fair Work Commission has announced the National Minimum Wage (‘NMW’) will increase by $40 per week (5.2% increase) from 1 July 2022, which is significantly higher than the 2.5% increase last year.
This means that the new NMW will be $812.60 per week or $21.38 per hour for all employees not covered by an award or registered agreement.
Award Minimum Wage increase
Award minimum wages will also increase by 4.6% which is around $40 per week for full time employees that work a 38 hour week (whichever is higher) from 1 July 2022.
Accordingly, minimum award wages above $869.60 per week will see a 4.6% increase and minimum award wages below $869.60 per week receive a $40 increase.
Whilst most award increases will take effect on or after 1 July 2022, some awards in the aviation, hospitality and tourism industries will not see an increase until after 1 October 2022, as these industries are considered to be still adversely impacted by the pandemic.
What does this mean for employers?
Employers must review their current employment contracts to ensure their employees are paid commensurate to their minimum wage entitlements. Even employers currently paying above minimum award rates should review their arrangements to ensure they are not suddenly underpaying staff as a result of these changes.
Further, as a minimum, from 1 July 2022 employers’ minimum superannuation contributions will be increased to 10.5% which must be paid into the employees’ complying funds.
Underpayment claims of employees carry onerous penalties. A court may order those in breach of underpayment provisions of the Fair Work Act 2009 (Cth) to be fined up to $13,320 for an individual and $66,600 for a company. Please contact Simon Abraham of our Employment Law team to ensure compliance with minimum wage requirements and avoid an underpayment claim.
