2020 Annual Wage Review

The Fair Work Commission has completed its 2020 Annual Wage Review and handed down their decision on minimum wages and Award rates of pay.

Pay rates for employees covered by a Modern Award or Enterprise Agreement usually change from 1 July each year. These changes result from the Fair Work Commission (FWC) undertaking the National Wage Case each year to determine if, and to what level the minimum wage should be increased. Changes have previously resulted in an increase in hourly rates of pay, in line with CPI.

This year however, the FWC’s decision is that while minimum wages will be increased by 1.75% a week to $19.84 per hour, the impact will be staggered, with not all employees getting the rise on 1 July 2020.

In handing down this decision the Commission acknowledged the unprecedented impact of COVID-19 and the response measures and argued that this impacted “weighed in favour of moderation”. The 1.75% increase is lower than CPI (2.2%).

Further, for the first time the increase will not be universally applied, nor will it be deferred unilaterally, as was requested by employer bodies. Rather, the new increase will commence on three different dates and apply to different groups of workers for each of these commencement dates.

The increase applies to Awards in 3 stages, which start from the first full pay period on or after:

• 1 July 2020
• 1 November 2020
• 1 February 2021.

The rationale behind the changing dates was that for those workers who have continued to work throughout the pandemic, these businesses have suffered less of an impact and can bear the increase commencing on 1 July 2020, whereas other more affected businesses, like construction should commence on 1 November 2020 and the most affected businesses, like tourism should commence on 1 February 2021. Awards have therefore been categorised into 3 Groups, based on the FWC’s determination of the impact of the pandemic on the employee’s respective industry.

The Decision will have a flow on effect to all of the Modern Awards and will result in increases in the base rates that are applicable in all Awards.

For anyone not covered by an Award or an Enterprise Agreement, the new national minimum wage will be $753.80 per week or $19.84 per hour. This applies from the first full pay period on or after 1 July 2020.

You can find more information on the 2020 Annual Wage Review along with a complete list of Awards in each of the 3 Groups here.

In the coming weeks the FWC will release Draft and then Final Determinations for each of the Awards.

Bare Bones Consulting can help you set up a HR function that’s right for you, your business and the commercial outcomes you’re seeking…including compliance with your Award and wages obligations. We know you’re busy running your operation so we offer you options that you can build on as you grow. Our HR solutions are tailored to you and your budget…and we never forget you’re the customer. Sound good?

With the start of a new financial year just around the corner, there’s no better time to give us a call or send us an email through our Contact Us page to find out why we’re the smarter choice in HR for your business.