Minimum wage increase 2020. What does it mean for you?
On Friday, the Fair work Commission announced the minimum wage would increase by 1.75%, making the new national minimum wage $753.80 per week or $19.84 per hour.
Unlike previous years, the unprecedented circumstances presented by the COVID-19 pandemic have resulted in this increase being rolled out in stages. The hope is to reflect the impact that has been felt differently among varying industries.
Awards have been classified into 3 groups with the increase implemented in stages. The effective dates for each group are listed below. For anyone not covered by an award or agreement, the new minimum wage will be applicable from 1 July 2020.
Group 1 – effective from 1st July 2020
- Frontline Healthcare & Social Assistance Workers
- Teachers and Childcare
- Other essential services
Group 2 – effective from 1 November 2020
- A range of other industries
Group 3 – effective 1 February 2021
- Accommodation and food services
- Arts and recreation services
A full list of all awards and which group they fall into can be found here.
This is the perfect time to consider what these increases will mean for you.
If you are an employee paid the minimum award rates, you should receive an increase in your wage from the first pay period the effective date. If you are unsure what your entitlements are, click here to find out more.
As a business owner, you need to make sure you are still paying your employees correctly. It is not uncommon for our team to come across a business that has unintentionally allowed their wages to slip below the award. After several consecutive years of minimum wage increases, you may have been paying above the award in the past, but that may no longer be the case. Many businesses don’t regularly review their wages unless they employ someone new.
Australian employment laws and awards are complex and, unfortunately, it is easy to get caught out if you do not stay on top of the entitlements you should be paying your employees.
Here are some areas that are worth considering to make sure you are on the right track.
Do you know which award covers your employees? We often speak to employers that tell us they pay above the minimum wage so their employees are not subject to an award.
This is not necessarily the case. If you operate in an industry that is subject to an award, or your employees work in a profession, unless you are paying above the high-income threshold, an award will apply.
You need to understand which award is applicable and remember that you can be covered by several different awards in the same business.
When was the last time you checked your employees against their award to ensure you are paying correctly? Will you still be paying above the award after the minimum wage increase?
When a business sets an employee’s salary above the minimum award rate, they often do so to incorporate other entitlements such as leave loading, allowances or reasonable overtime. This can mean that a small minimum wage increase, can actually mean you are no longer meeting the Better Off Overall Test. Take the time to benchmark your salaries every year to check that you are still paying your employees correctly.
Recruitment and Retention
If you pay above award rates, you need to ask yourself why you decided to pay above the award in the first place. Was it to meet the market and attract the best candidates? If so, you may want to adjust salaries to ensure you stay competitive and reward your employees for retention.
It is worth considering an annual review of employee salaries and the end of the financial year is a good time to do this. You can allow for the increases in your budget. Even if you don’t increase salaries, you will have the peace of mind that you are meeting your legal obligations.
For further information on the minimum wage increase, visit www.fairwork.gov.au.
If you need assistance with award and salary benchmarking, or any other HR related issues, visit our website to find out how the Strawberry Seed Consulting team can help you.
Updated: June 2020