FAQ: New National Minimum Wage
Posted by: on 12 June 2015 in Human Capital Management
June 12 – by David Bates
The Fair Work Commission (FWC) has now handed down its draft Minimum Wage Order for the 2015/16 Financial Year. In this post, we answer the most common questions the Workforce Guardian from ADP HR Experts receive about Australia’s National Minimum Wage.
Q1. Who is Paid the Minimum Wage?
According to the FWC, approximately 1.8 million employees in Australia currently receive the National Minimum Wage.
This figure is surprisingly high given the National Minimum Wage only applies to employees who are not covered by one of the 122 Modern Awards (that is, employees who are ‘Award-free’).
Many ‘Award-free’ employees are in fact senior managers who earn much, much more than the National Minimum Wage, so the number of employees paid the actual Minimum Wage is likely to be much less than claimed.
Q2. What is the New Minimum Wage?
The FWC has ordered a 2.5% increase to the National Minimum Wage, bringing it up to $656.90 for a 38 hour working week, or $17.29 per hour.
Q3. When Does the Increase Take Effect?
The increase applies to each employee’s first full pay period that begins on or after 1 July this year.
Q4. Do Casuals Still Receive the ‘Casual Loading’?
Yes, casual employees must still be paid the applicable casual loading, which in most cases is 25% of their base hourly wage.
Q5. Do Award-Covered Employees Also Receive an Increase?
Yes, because the same percentage increase applied to the National Minimum Wage is generally also applied across all the thousands of other minimum wage rates set out in each of the nation’s 122 Modern Awards.
The FWC is now in the process of updating all of these Modern Awards to reflect these increases. You won’t be able to confirm the precise new minimum rates that apply to your Award-covered employees until these revised Modern Awards are published by the FWC sometime between now and 1 July.
Q6. My Employees Are Already Paid More Than the Minimum Wage – Do I Have to Increase Their Pay?
No. Employees who are Award-free are entitled to be paid at least the National Minimum Wage, and Award-covered employees must be paid at least the minimum rate for their corresponding Award classification.
This means if you are already paying employees a higher amount, you don’t need to pass on this latest increase to employees unless you want to.