Yesterday the Fair Work Commission’s Expert Panel for wage reviews announced its findings in respect to its Annual Wage Review for 2018-19. Many media outlets have portrayed this as simply an increase to the National Minimum Wage (NMW) of 3%. This is not the full story.
The 3% wage increase also applies to all Award base rates.
For employers who are paying either the NMW for non-Award employees or the base rate of pay for classifications under applicable Awards, it is important that from 1 July 2019 your business is ready to implement the 3% increase where it applies. For employers that pay a “loaded hourly wage rate” (or “all-inclusive wage rate”) which is designed to compensate employees for a range of Award entitlements (eg: base rate, allowances, loadings, overtime and penalty rates) it is important that the employer carefully ensures that either the current loaded hourly wage rate will fully compensate their employees for all Award entitlements or that an adjustment is made to their current loaded hourly wage rate to ensure that, in future, employees are fully and properly compensated for Award entitlements.
For employers that pay an annualised salary for Award employees (where Awards allow this to be done), again, employers should carefully check that the annual salary being paid to the employees will fully compensate them for any Award based entitlements that the annualised salary purports to cover (eg: base rate, allowances, loadings, overtime and penalty rates). Annualised salaries may need to be adjusted or allocated hours may need to be reduced to ensure current annualised salaries fully compensate employees as required.
Failure to properly check these matters, and make required adjustments where necessary, could result in employers being exposed to retrospective wage claims for entitlements where employees have not received the full benefits they are entitled to under an Award, or the NMW. Retrospective claims can be made for up to six years meaning that underpaid entitlements for a workforce can result in a massive multiplier effect that could potentially impact in the future viability of the business.
Should you require any guidance in respect to these issues, please contact our team of expert employment law and workplace relations lawyers who have extensive experience in advising on Award and Statutory obligations.
Mark Peters – Partner
B A (Macq), LL B (Sydney), M Sc (Oxf), FAICD, FIML
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