Annual wage review 2014

Last week, the Fair Work Commission Minimum Wage Panel handed down its decision under the Fair Work Act, increasing national minimum wage rates by 3 per cent (higher than the increase of 2.6% ordered last year).

All increases will apply from the first full pay period after 1 July 2014.

The national minimum wage will increase by $18.70 per week from the current $622.20 per week ($16.37 per hour) to $640.90 per week ($16.87 per hour) from the first full pay period after 1 July 2014. The weekly rates are based on a 38 hour week and weekly wages should be rounded to the nearest 10 cents.

Minimum award rates will increase for each classification level, while award allowances linked to the standard weekly rate will also increase by 3.0 per cent. Other allowances in modern awards will increase by the percentage movement in the applicable CPI figure.

The casual loading for award/agreement free employees will increase from 24% to 25%. The casual loading has now been increased by 1 percent each year to bring it into line with the 25% casual loading that is applicable in most modern awards.

For employees covered by a collective or enterprise agreement or individual flexibility agreement, employers should ensure that the rates of pay under the agreement are at least equivalent to the applicable modern award rates for equivalent award classifications.

What does the increase really mean for upcoming private and APS wage rises?

The 3 per cent rise does not apply to employees who are already being remunerated above the minimum wage. Accordingly, the annual wage increase tends only to direct affect the relatively small portion of workers who are paid base wages.

As many Government departments and agencies gear up for the latest round of bargaining, it will be important for employees, and their representatives, to take into account the greatly reduced financial resources available for wages. The impending, severe budgetary cuts, along with the inevitable efficiency dividends, make it unlikely that departments will be able to deliver annual wage rises anything like 3%.

These limitations will no doubt extend to bargaining in the private sphere, as businesses look to ensure their long-term commercial sustainability. While the decreased capacity of both public and private representatives to offer attractive wage increases is likely to be a point of contention in bargaining rounds over the coming months, strong wage increases for employees in the past few years will continue to benefit those employees in the longer term.

For further information on how the increase in wage rates and allowances may affect your employees, please contact the Meyer Vandenberg Employment, Industrial Relations and Safety Team:

William Ward| Special Counsel
(02) 6279 4444