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Minimum Wage Increase Announced for 2020

Minimum Wage Increase Announced for 2020

Today the Fair Work Commission (Commission) has handed down its yearly decision on the National Minimum Wage.

Australian Wages Rising from 1 July 2020


The decision was fractionally delayed this year by the Commission due to the COVID-19 Pandemic.

The Commission has decided to increase the National Minimum wage, together with all Modern Award minimum rates of pay by 1.75% to $19.84 per hour (or $13 per week). While they have acknowledged a difficult macroeconomic circumstance at the current time, the Commission has determined that a 1.75% increase was justified and necessary.

Due to the current economic conditions, the effective dates for these changes will depend on which Modern Award is applicable:

  • GROUP 1: The first group of changes will include essential services and be effective 1 July 2020. This includes Health Care, Social Assistance Workers, Teachers and Child Care Workers, and other essential services.

  • GROUP 2: The second group will be effective on 1 November 2020 and will include Construction, Manufacturing and some other industries.

  • GROUP 3: Last third group will be the remaining industry sectors and the increase will be effective from 3 February 2021. This group includes Accommodation and Food Services, Arts, Recreation, Aviation, Retail and Tourism.

What This Means for You

Modern Awards

Employers who pay employees at the National Minimum Wage or Modern Award rates of pay will need to apply the increase upon the dates outlined above. Further information as to the dates for the increase and impacted groups will be provided in due course.

Annualised Salaries and Individual Flexibility Agreements

If you have implemented Individual Flexibility Agreements, you will need to reassess those agreements to ensure employees remain ‘better off overall’ when compared to the newly increased Modern Award rates. Employers who use annualised salary arrangements will need to conduct an audit of those annualised salaries against the new Award rates and working patterns to ensure the annual salary compensates for award entitlements.

Enterprise Agreements

The new Modern Award rates will also form the baseline for ‘better off overall’ testing new Enterprise Agreements (EA). If you have an EA in place, you will need to ensure the minimum base rates in the EA remain at a minimum equal to the new Modern Award rates. If not, EA rates will need to be increased to match the Modern Award.

Allowances

Today’s decision will impact some allowances as well as base rates. A number of Modern Award allowances are expressed as a percentage of the ‘standard rate’, which is linked to the wage rate of a specific classification in the Award. These allowances will therefore increase in line with the increase in the standard rate.

More Information

You can access more information regarding these changes and how they may affect you on the Fair Work Umbudsman site outlining the Changes to awards in 2020 and the Commission’s increase to minimum wages announcement.

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    About the Author

    EnVision Partners
    EnVision Partners
    Tax & Business Specialist
    The Collins English dictionary defines the meaning of ‘envision’ as being to “conceive of a possibility, especially in the future, or foresee”. Our business name reflects our desire to provide our customers with such foresight, something that has not changed since the inception of EnVision Partners in 2002.

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