It’s that time of the year again – Annual Wage Review 2021-22

The Fair Work Commission has just published its Annual Wage Review decision, which provides that the National Minimum Wage will increase by 5.2% from $20.33 per hour to $21.38. This translates to $812.60 per week, up from $772.60 per week.

Modern award minimum rates will also increase by 4.6% for those who are paid more than $869.60 per week and $40 per week for those who are paid less than $869.60. This distinction is aimed at providing a proportionately higher increase to low-paid employees.

Staged implementation for some awards

Similar to last year, the Commission has identified that exceptional circumstances exist for some industries, being the aviation, tourism and hospitality industries, that justify a delayed operative date for the increases.

More specifically, the increases will apply to the following awards from 1 October 2022:

• Aircraft Cabin Crew Award 2020
• Airline Operations – Ground Staff Award 2020
• Air Pilots Award 2020
• Airport Employees Award 2020
• Airservices Australia Enterprise Award 2016
• Alpine Resorts Award 2020
• Hospitality Industry (General) Award 2020
• Marine Tourism and Charter Vessels Award 2020
• Registered and Licensed Clubs Award 2020
• Restaurant Industry Award 2020

For all other modern awards not listed above, the variations are to apply from 1 July 2022.

Superannuation contributions

Employers should also note that from 1 July 2022, the Superannuation Guarantee percentage is also set to increase to 10.5% and the $450 per month threshold for super guarantee eligibility will be removed.

Relevant factors for the decision

As part of the normal process, the Fair Work Commission invited submissions in relation to the Annual Wage Review from interested parties, including individuals, organisations and academics. This year, the newly elected Labor Government made a six-page long late submission that emphasised that the Commission should ensure that the real wages of Australia’s low-paid workers do not go backwards.

The Commission in announcing the decision, referred to the significant change in key economic indicators since the 2020-21, namely the sharp rise in the cost of living and the strengthening of the labour market. The inflation rate is at 5.1% and is expected to peak at 6% in the second half of this year. The Commission further noted that the increases awarded last year have resulted in a fall in the real value of National Minimum Wage and modern award minimum wages. Therefore, an increase in the National Minimum Wage and modern award minimum wages is necessary.

What do we do next?

• Employers must apply the new National Minimum Wage and modern award minimum wage increases to the first full pay period on or after 1 July 2022, unless one of the above listed modern awards from the aviation, tourism and hospitality industries applies.
• For employers who pay their employees above the National Minimum Wage or modern award minimum wage, you should still review all employee wages/salaries to ensure that you are satisfying all obligations under any relevant awards/minimum wages after the increases apply.
• From 1 July 2022, all employers must pay superannuation guarantee contributions at the rate of 10.5% of an employee’s ordinary time earnings. This requirement does not apply to certain employees, such as those under 18 years old who work less than 30 hours per week or those who perform work that is of a domestic or private nature.

Gadens is able to assist you with any queries you have in relation to minimum wages, superannuation contributions and other employee entitlements.

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Authored by:

Deivina Peethamparam, Partner
Steven Troeth, Partner
Carlyna Yap, Lawyer