2019 Annual Wage Review – 3% Increase

It is that time of year again and the Fair Work Commission’s expert panel has handed down its Annual Wage Review decision for 2019.

From the first full pay period after 1 July 2019, the national minimum wage will increase by $21.60 a week to $740.80, or $19.49 an hour.  The weekly rate is to be rounded to the nearest 10 cents.  This equates to an additional 56 cents an hour and is an increase of 3.0%.

Importantly, this increase also applies to modern awards.  All minimum wage rates in modern awards will rise by 3% from the first full pay period on or after 1 July 2019.  There will also be flow on effects to numerous allowances and penalty rates in modern awards.

This decision continues the trend of recent minimum wages increases which distinguish themselves from the more moderate increases of the past.  Looking backwards, the most recent annual wage increases have been:

2019 – 3.0%

2018 – 3.5%

2017 – 3.3%

2016 – 2.4%

2015 – 2.5%

As we have foreshadowed in our wage review articles over the last few years, employers need to prepare themselves for higher annual wage increases than we have seen in the recent past.

Employers should ensure their employees are paid at least the minimum amounts required under the applicable Award or Agreement.

An underpayment, even one which is an innocent mistake, exposes an employer to a number of claims and costs including:

  1. back pay to rectify the underpayment;
  2. contribution of additional superannuation (eg if wages have been underpaid, it is likely superannuation contributions have also been lower than they should have been);
  3. fines for breaching an applicable Award or Agreement, the maximum fine, currently:
    1. for a serious contravention:
      1. $630,000 for a company; and
      2. $126,000 for an individual;
    2. for a breach which is not a serious contravention:
      1. $63,000 for a company; and
      2. $12,600 for an individual;
  4. cost to audit past payments to establish the extent of an underpayment (note: the Ombudsman usually requires the employer to undertake the audit at their cost and to give the results to the Ombudsman to check); and
  5. disruption to the employer’s business.

When it comes to underpayments, prevention is better than a cure.  If you require assistance checking pay rates, please contact our Business and Employment Law team:

 

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