This week’s decision to increase the national minimum wage by 3 per cent will affect many aged care organisations from 1 July, writes Charles Watson.

The Fair Work Commission handed down its annual wage review decision on Thursday. The decision will increase the national minimum adult wage by 3 per cent.

Charles Watson

This increase will be applicable from the first full pay period commencing on or after 1 July 2019.

The new adult National Minimum Wage will be $740.80 per week or $19.49 per hour. This constitutes an increase of $21.60 per week to the weekly rate.

Employer to-do list

No changes take effect until the first full pay period on or after 1 July 2019. However, employers should consider the following issues as they relate to their employees.

Award covered employees: The 3 per cent increase will flow into all Modern Award rates of pay in the coming weeks when adjustments are finalised by the FWC.

Any employer who pays their employees at the minimum award rate of pay will be required to increase pay rates by 3 per cent from the first full pay period on or after 1 July 2019. Weekly wages within awards will be rounded to the nearest 10 cents as part of the process of applying the increase.

Above-award paid employees: The incoming increases to the award rates of pay can be absorbed into an employee’s current rates of pay as long as the result leaves their rate of pay at least equal to the increased award minimum rates.

Salaried award covered employees: Award covered employees who are paid an annualised salary must ensure the employee’s annualised salary remains sufficient to absorb the increased award-based monetary entitlements, and make adjustments upward where necessary.

Award-free employees: An employer who has award-free adult employees must pay them at least the new National Minimum Wage rate from the first full pay period on or after 1 July 2019.

An employer with award free junior employees must pay those employees at the appropriate percentage of the National Minimum Wage rate from the first full pay period on or after 1 July 2019.

Businesses with enterprise agreements: Employers with enterprise agreements will need to ensure that the base rates of pay in their enterprise agreements are at least equal to the relevant rate in respective awards as increased by the decision.

Employees covered by individual flexibility agreements: Employers with individual flexibility agreements need to ensure employees are better off overall when compared to the applicable award.

What next?

The Fair Work Commission will now commence issuing draft determinations and orders about how this decision affects modern awards and then update the pay rates in each award.

This process usually takes the commission a few weeks to complete. As usual we expect the updated rates of pay to be available from about the 2nd or 3rd week of June.

Charles Watson is general manager of human resources at Workforce Guardian, a human resources and employment relations service for employers.

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