National Minimum Wage and Modern Award rates increase announced

Today at 10 am AEST, The Fair Work Commission (FWC) handed down the Annual Wage Review 2022-23 decision.

Our key takeaways from the decision include:

1. The decision provides an increase of 5.75% from the first full pay period after 1 July 2023 to both the national minimum wage and all minimum Modern Award rates.
2. The FWC recognised the very “unusual economic circumstances” and awarded an increase which it described as “the most that can reasonably be justified”.
3. An increase of 5.75% will create significant challenges for some employers.
4. Although the increase does not directly apply to employees covered by an Enterprise Bargaining Agreement, the Fair Work Act, 2009 requires that base rates of pay in Enterprise Bargaining Agreements must not fall below the Award base rate of pay. A 5.75% increase in Award rates may well result in some base rates in Enterprise Bargaining agreements falling to below the Award base rate from 1 July 2023. Employers need to be aware of their obligations in this regard and be undertaking assessments now to avoid underpayments from 1 July 2023.

The impact of the FWC wages decision will be different for each employer. However, all employers are encouraged to ensure that they do not inadvertently fall into a situation of underpaying their employees and this includes ensuring ongoing compliance with base rates of pay requirements for Award and Enterprise Bargaining covered employees.

In our experience many employers are unsure if their employees are covered by a Modern Award. Now is the time to take steps to clarify this situation. Modern Award coverage is not something that an employer can avoid or can opt out of. If there is a Modern Award which applies to the employers industry or to the occupations of its employees it is highly likely that some if not all employees are covered by a Modern Award.

Our HR Consulting division are here to assist employers resolve questions about Modern Award coverage and/or ensuring compliance with minimum obligations for base rates of pay. Of course, Modern Award coverage creates employment obligations for employers other than minimum rates of pay and therefore understanding if your employees are covered by a Modern Award is imperative and should not be delayed.

A recording of the Full Bench proceeding was live-streamed and is available here. In addition, the FWC summary of this decision is available on the FWC website.

If you would like to know more about the latest national wage increases or the implications for your business, please contact your usual Mazars HR consultant or phone 1300 200 725.

Published: 02/06/2023

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