Jun 6th, 2023
The Fair Work Commission (FWC) announced in their Annual Wage Review Friday last week that the National Minimum Wage (NMW) will increase by 5.75 per cent on 1 July, 2023. This will raise the current minimum wage from $21.38 to $23.23 per hour, $882.80 per week. For those covered under a modern award, which is approximately 20.5% of Australian employees, the minimum rates of pay will also increase by 5.75%.
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These changes will take affect from the first full pay period beginning on or after July 1, 2023.
It’s important to note that a key change with this year’s wage increase. The FWC has determined that the C14 wage rate in modern awards – which is the lowest wage rate and has always been intended as a transitional entry rate of pay for new employees – no longer constitutes a proper minimum wage safety net for award/agreement free employees. Therefore, it was decided that it would be most appropriate to instead link the NMW with the C13 wage rate instead – the next highest wage rate in modern awards. In practicality, this now constitutes as an 8.65% increase to the NMW for award/agreement free employees.
The primary denominators for a relatively higher wage increase this year can be attributed to recent surges in inflation, which contributed to the cost-of-living crisis and overall financial burden, particularly amongst low-income and award-reliant workers, which has been cited in previous increases. Another factor considered for this year’s increase is to help tackle the ongoing gender pay gap which negatively affects female workers. This aligns with recent changes from the recent Secure Jobs and Better Pay Bill. That being said, it was concluded by the FWC that despite the healthy increase, there would be no adverse effect on the economy, alluding to the robust health of the labour market.
Ahead of the impending increase to the NMW and award minimum rates of pay, its important for employers to review their minimum pay obligations to their staff. This includes actioning the increase for those paid at the NMW or award minimum, or for those that pay an above award rate/salary, confirming that their pay arrangements are still satisfactory.
The specific new award minimum rates of pay will also be released prior to July 1.