Thinking | 15 June 2022
Minimum wage increase 2022: wages rise by 5.2% for the lowest-paid
By Alison Baker
The Fair Work Commission’s Expert Panel for annual wage reviews has now published its Annual Wage Review 2021-22.
The outcome of the Review is that:
- the National Minimum Wage will be $812.60 per week (up from $772.60 per week) or $21.38 per hour (up from $20.33 per hour), which amounts to a 5.2% increase; and
- modern award minimum wage rates will increase by 4.6% subject to a minimum increase of $40 per week, such that:
- modern award minimum wage rates above $869.60 per week will increase by 4.6%; and
- modern award minimum wage rates below $869.60 per week will increase by $40 per week.
The National Minimum Wage and most modern award minimum wage rates will increase from 1 July 2022. 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 increases to minimum wage rates in modern awards in the aviation, tourism and hospitality sectors will operate from 1 October 2022.
Accordingly, modern award minimum wage rate increases will be implemented in the following stages.
|1 July 2022||All modern awards other than those specified below.|
|1 October 2022||Aircraft Cabin Crew Award 2020, Airline Operations – Ground Staff Award 2020, Air Pilots Award 2020, Airport Employees Award 2020, Airservices Australia Enterprise Award 2016, Alpine Resorts Award 2020, Hospitality Industry (General) Award 2020, Marine Tourism and Charter Vessels Award 2020, Registered and Licensed Clubs Award 2020, Restaurant Industry Award 2020.|
The 5.2% increase to the National Minimum Wage is significant in comparison to the 2.5% increase the Panel handed down last year. The Panel acknowledged the sharp rise in the cost of living and the greater impact rising inflation has had on the low-paid.
The Panel concluded that these changes to the economic landscape weighed in favour of a higher increase, particularly for low-paid employees.
What does it mean for employers?
The Panel’s decision means that employers who pay their employees at minimum wage rates pursuant to the National Minimum Wage, a modern award, or other industrial instrument, will be required to increase their employees’ pay in the first pay period on or after 1 July 2022 (or on or after 1 October 2022 where modern awards in the aviation, tourism or hospitality sectors apply).
Employers who pay their employees under an industrial instrument, such as an enterprise agreement, should review the rates under that instrument to ensure that they are equal to or above the applicable minimum wage rates.
Employers who pay their employees above the minimum wage rates by using set-off clauses or annualised wage arrangements may be able to absorb the increases without making any changes. However, this should be carefully reviewed and considered.
This article was written with the assistance of Nate Cheng, Law Graduate.
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