The Australian Fair Work Commission (FWC) increased the national minimum wage by 2.5%, effective 1 July 2021. Modern award minimum wages also increased by 2.5% in three different stages depending on the industry. Modern award minimum wage increases will be effective from the first full pay period starting on or after 1 July 2021, 1 September 2021, or 1 November 2021, based on industry.
Background
There are more than 100 industry or occupation awards (legal documents that outline the conditions of employment) that cover most people working in Australia. For employers seeking more detail, in addition to minimum rates of pay, leave, hours of work, overtime, and allowances, each award outlines eligibility requirements under its coverage provision. The list of all modern awards may be found here. Modern awards apply to all employees covered by the national workplace system, which is a collection of legislation that includes the Fair Work Act 2009, the National Employment Standards and other laws. Modern awards do not apply to some public sector employees or non-constitutional private sector corporations including sole traders, partnerships, trusts and corporations whose main activity is not trading or financial.
An annual wage review of the national minimum wage and the modern award minimum wages is required under the Fair Work Act 2009. The annual review is directed by the FWC. for the past few years, the FWC has been increasing the minimum wage to a percentage higher than inflation, which has successfully led to overall wage growth in Australia. This minimum wage growth policy has placed Australia at the top of the Organization for Economic Co-operation and Development (OECD) rankings for purchasing power.
Key details
The wage increase is expected to impact 23% of Australian employees. The increase applies to employees whose pay rates are comprised of:
- The national minimum wage
- A modern award (minimum wage entitlement relating to a specific industry or occupation)
Beginning 1 July 2021, the minimum wage for employees age 21 and over is AUD 20.33 per hour, or AUD 772.60 per week (before tax). This amounts to an increase of AUD 0.49 per hour and AUD 18.80 per week.
While modern award minimum wages for most industries increased on 1 July 2021, the increase will impact minimum wage workers in the retail industry on 1 September 2021, and those in aviation, tourism, fitness, and a few other retail sectors on 1 November 2021.
Next steps
Affected employers should review their current pay arrangements and apply the wage increase to their employees from the first full pay period starting on or after the change is effective. The new modern award minimum wage rates can be found on the Fair Work Ombudsman’s website.