It's nearly that time of the year again when the Fair Work Commission will hand down the increase the Minimum Wage (FMW). This will mean that all Award rates of pay will increase by the increase that is pronounced. As is always the case, the announcement is expected in early to mid-June with an operative date of the first pay period on or after 1 July 2016.
How much will the increase be?
As is always the case, the peak Employer bodies and the Unions are "poles-apart" on their submissions for the increase. Employers are arguing for a modest 1.2% increase, while the ACTU submits that the increase should be a flat $30.00 per week I have long given up on trying to accurately predict the increase, however the trend since I can recall has been that the increase is about .5% -1% higher than the current CPI figure. In the last 5 years or so, the increase has been between 2.5% and just under 3%. CPI is currently running at about 1.3 - 1.5%. The recent interest rate cut by the RBA may also have an impact on the outcome.
So I'm going to hazard a guess and suggest that the increase will be between 2.3% and 2.5% - the lowest for a long time. But don’t be surprised if the increase is a flat dollar amount because we have had 5 years of percentage increases which results in an expansion in the range of wages, and the FWC may want to curb that expansion this year.
Do I have to pay the increase?
The question I'm often asked at this time is "Do I have to pass on the increase to my staff?" The short answer is yes; if you pay your staff under the Award.
However, if you pay your staff wages or salaries over the Award, then it may well be that you can absorb any increase into that over-Award payment. But much will depend upon the employment contract or letter of appointment that you have with the staff member and how the over-Award payment is expressed in those documents.
If you would like further information in relation to this issue, and whether the FMW increase can be absorbed into above Award payments, please do not hesitate to contact us.
"Since the writing of the article, the Fair Work Commission have announced a 2.4% increase in Award wages operative from 1 July 2016. If you would like information as to the application of this increase, and whether or not it can be absorbed into over-Award payments, please contact Effective Workplace Solutions"
Katherine (08) 7919 7019
2/46 Chardon St