Minimum wage increase 2021: wages rise by 2.5%

By Alison Baker

The Fair Work Commission’s Expert Panel for annual wage reviews (Panel) has now published its Annual Wage Review 2020-21.

The outcome of the review is that:

• the National Minimum Wage and modern award minimum wages will increase by 2.5%; and
• the National Minimum Wage will increase to $772.60 per week (up from $753.80 per week) or $20.33 per hour (up from $19.84 per hour).

Staged implementation

While the National Minimum Wage will increase from 1 July 2021, in recognition that the impact of the COVID-19 pandemic has not been consistent across all sectors of the economy, the Panel has determined that modern award increases will be rolled out in stages.

The three-stage process, beginning with sectors assessed as being less impacted by the COVID-19 pandemic, is as follows:

The 2.5% increase to the National Minimum Wage is a marked increase on the 1.75% increase the Panel handed down last year. The Panel noted current economic performance exceeded expectations which weighed in favour of a higher increase. The Panel also acknowledged that many sectors of the economy were well on their way to recovery from the impacts of COVID-19.

With that said, the Panel recognised the economic recovery had been uneven across sectors. The patchy recovery was the basis for the delayed increases to wages in certain sectors.

Another factor impacting the Panel’s decision was the increase to the Superannuation Guarantee due to take effect 1 July 2021. The Panel acknowledged the impact this would have on employers, taking it into account when determining the increase. However the Panel did not apply a ‘direct quantifiable discount’^[1] to the wage increase on this basis.

What does this mean for employers?

The Panel’s decision means that employers who pay their employees at the National Minimum Wage (and under certain industrial instruments) will need to increase their employees’ pay in the first pay period on or after 1 July 2021.

Employers who pay minimum wage rates under a modern award (and certain industrial instruments), will be required to increase their employees’ pay in the first pay period on or after 1 July 2021, 1 September 2021 or 1 November 2021 – depending upon which modern award applies.

Employers who pay their employees under an industrial instrument, such as a collective or enterprise agreement, should review the rates under those instruments to ensure that they are equal to or above the applicable minimum wage rates.

Employers who pay their employees above the minimum wage rates may be able to absorb the increases without making any changes.

Employers can contact a member of the Hall & Wilcox employment team with any queries or for assistance with meeting their minimum wage compliance obligations.

This article was written with the assistance of Rachel Shaw, Law Graduate.

[1] [2021] FWCFB 3500 at [58].