2011 Annual wage review

Under the Fair Work Act 2009, the Minimum Wage Panel of Fair Work Australia must conduct an annual wage review in each financial year.

In each annual review, Fair Work Australia:

• must review modern award minimum wages and the National Minimum Wage Order,
• must make the National Minimum Wage Order,
• may make one or more determinations varying modern awards to set, vary or revoke modern award minimum wages

Determinations made by Fair Work Australia, resulting from the Annual Wage Review, commence on 1 July and become operative on the employees first full pay period on or after 1 July.

Who does the 2011 Annual Wage Review apply to?

 The 2011 Annual Wage Review applies to all employees covered by the national workplace relations system.

Employees covered by the national workplace relations system include employees:

• employed by a constitutional corporation (these are corporations that are trading or financial, usually Pty Ltd or Ltd companies), 
• employed in Victoria, the Northern Territory or the ACT,
• employed by the Commonwealth or a Commonwealth authority, 
• employed as waterside workers, maritime employees or flight crew officers employed in connection with interstate or overseas trade or commerce.

From 1 January 2010, sole traders, partnerships, other unincorporated entities and non-trading corporations in New South Wales, Queensland, South Australia and Tasmania joined the above types of employers in the national system, and are no longer covered by separate state systems (with the exception of some State government public sector and local government employers, who remain covered by their State system).

The Annual Wage Review does not apply to:

• employers who are sole traders and partnerships in Western Australia,
• corporations in Western Australia whose main activities are not trading or financial,
• state government public sector employers and employees (except in Victoria where most of these are covered by the national system),
• some local government employers and employees (depending on the nature of the State’s referral). In Victoria and Tasmania all local government employers and employees are covered by the national system.

What is the Annual Wage Increase?

Fair Work Australia has granted an increase of 3.4% to modern award weekly wages.

The Annual Wage Review increase also applies to pay rates for employees covered by the national minimum wage, modern awards, all transitional Australian Pay and Classification Scales, State reference transitional awards and Division 2B State enterprise awards.

I am covered by a modern award, how does the increase apply to me?

The Annual Wage Review decision increases modern award weekly wages by 3.4%.

Most modern awards contain transitional provisions which provide for the phasing in of differences between pre-modern award and modern award rates of pay. These transitional provisions need to be considered to calculate your current base rate of pay.

I am covered by a registered agreement, how does the increase apply to me?

The terms of your registered agreement should be checked to see how the agreement deals with any annual wage increases.

However, the base rate of pay in any registered agreement must not be less than the relevant modern award rate of pay that would have applied had the employee not been on the registered agreement.

Where there is no modern award, the base rate of pay cannot be less than the appropriate rate in the national minimum wage order.

If the relevant modern award contains phasing-in provisions then this may alter the minimum base rate payable during the transition period between 1 July 2010 and 1 July 2014.

I am award / agreement free, how does the increase apply to me?

Employees not covered by awards or agreements are entitled to receive the relevant national minimum wage derived from the national minimum wage order

The national minimum wage order set the following wages for award/agreement free employees (to take effect from the first full pay period on or after 1 July 2011):

• Adult employees - the adult national minimum wage is increased from $569.90 per week to $589.30 (before tax), or $15.51 per hour. An adult employee is a national system employee who is 21 years or over.
• Casual employees - casuals now receive a default casual loading of 22%.
• Special national minimum wages for apprentices, trainees and junior employees
  • Apprentices - Apprentice wage provisions in the Miscellaneous Award 2010 are to apply to award/agreement free employees to whom training arrangements apply. Award / agreement free adult apprentices cannot be paid less than the adult national minimum wage.
  • Trainees -The National Training Wage Schedule in the Miscellaneous Award 2010 is to apply to award/agreement free employees to whom training arrangements apply. 
  • Juniors - Wages for award/agreement free junior employees are to be based on percentages for juniors in the Miscellaneous Award 2010 applied to the national minimum wage. 
• Special national minimum wage 1 increased to $589.30 per week, calculated on the basis of a week of 38 ordinary hours, or $15.51 per hour for employees with a disability which does not affect their productivity (and who is not a junior employee, or an employee to whom a training arrangement applies).
• Special national minimum wage 2 applies to an award and agreement free employee with a disability that does affect the way that they can do their job (i.e. their productive capacity).
  
  These employees can be assessed under the supported wage system and will earn a percentage of the full special national minimum wage (which is $589.30 per week, or $15.51 per hour). This percentage is based on the employee’s assessed productive capacity.
  
  For example, if an employee has an assessed productive capacity of 70%, they would be paid 70% of the national minimum wage (i.e. 70% of $589.30).

How does the Annual Wage Review affect modern award penalty rates and loadings?

Most modern awards provide transitional arrangements which allow for the progressive phasing in of modern award entitlements.

Base rates of pay, penalty rates and loadings will be phased in over a period of four years in 20% instalments which takes effect from the first full pay period on or after 1 July every year until 1 July 2014.

Employers need to factor in the 2011 and any future annual wage review increases that Fair Work Australia may make.

Are allowances increased following the Annual Wage Review?

‘Work related’ allowances, such as leading hand, industry allowances etc, under modern awards are calculated based on specified percentage of the ‘standard rate’ of pay in the award. These allowances will therefore increase in line with the increase to the standard rate. The standard rate is defined in the modern award.

‘Expense-related’ allowances will be increased by Fair Work Australia in accordance with the requirements of the relevant modern award. The adjustments will be published by 1 July 2011.

Are piece rates in modern awards affected by the Annual Wage Review?

The increase in modern award minimum wages will flow onto piece rates in modern awards.

If I am paid above the modern award, is my employer required to also increase my pay in line with the Annual Wage Review?

An employer has a legal responsibility to ensure that all of their employees are paid at least what they would receive under a modern award, registered agreement or national minimum wage order.

If an employee is paid above the relevant modern award base rate of pay and a minimum wage increase occurs, provided the employee’s over award payment still results in them being paid at least the base rate of pay, the employer is considered to have met their obligation with respect to the minimum wage.

 

Information reproduced with permission from Fair Work Australia