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Federal Minimum Wages & How to Determine What You Should Be Paying

At Knox Tax, we’re here to help you understand the true whys and wherefores of this contentious topic, and also give you the guidance to get it right.  And if you find you need more information, don’t hesitate to get in touch with us on 9762 7344 or via mail@knoxtax.com.au

How much did the Federal Minimum Wage increase?

The absolute minimum adult wage in Australia has now increased from $17.29 per hour to $17.70 per hour.

All other minimum wages in Modern Awards increased by 2.4%.

When did this increase occur?

The new Federal Minimum Wage rates apply from the first pay period on or after the 1st of July, 2016.

What should I do now?

If you are paying the minimum under your Modern Award(s) then you may need to budget for this increase. Also, this is a great time to review your employee classifications to ensure that you are paying them correctly, including weekend and overtime penalty rates.

If you are paying just above the Modern Award minimum, check that your wages are keeping pace. If you are still over and above the new minimums, you do not have to pass the increase on.

If you are paying a salary well above the Modern Award minimums, then check your contracts or policies to see if you need to pass on a CPI indexed wage increase, or similar, for the new Financial Year.

AND NOW FOR THE LATEST

Minimum Wages – How are they determined?

Update 5th July, 2016 – Courtesy of our HR Consultant, Sheena Kane

I often get asked the minimum, legal pay for employees. There are a number of factors to consider here, including what the company does, and what the person does, as well as their personal characteristics, such as age or qualifications.

First of all, I must find the appropriate Modern Award coverage. This usually comes down to the industry of the company. If the company is included in “coverage”, I need to then look at the “classifications” to see if the person’s job is included. Most of the time it is. If not, then there is usually a Modern Award which covers occupations.

A person is classified according the job required to be done by the employer. A person will usually be classified higher if they have more responsibility, require extra skills or qualifications. However, an employee’s qualifications will only count if they are relevant to the role, and required by the employer. For example, I’ve got a business degree. But if you hire me to be the cleaner, then I get paid as the cleaner. An employee will also get paid a casual loading if engaged as a casual.

From there, penalty rates may need to be applied. This may be for weekend work, shift work, work performed on public holidays, or overtime.

Allowances are also payable under many Modern Awards. These usually compensate for:

  • Negatives associated with a role, such as dealing with offensive materials, or dangerous conditions, or lack of amenities,
  • Extra responsibilities, such as supervising other staff,
  • Mitigating expenses, such as vehicles allowances.

Modern Awards are quite specific about who gets what allowances and why. It also pays to check if the allowance is “all purpose”, which means you may pay it even when the person is on leave.

Modern Awards can also specify when an employee gets paid less than the minimum. This can occur for junior wage rates (usually under 21 years old), or training arrangements, such as an apprenticeship or traineeship. Lower wages can also be payable to those who are eligible for the “Supported Wage System”. This is a reduced wage for disabled employees, who have been assessed by the Federal Government.

Also to bear in mind, the minimum legal pay rate applies to those “on trial”. And “work experience” payments only apply to those involved in a recognised work experience program being run through a secondary school. EBA’s and contracts may further change legal minimums.

If in doubt about what to pay an employee, don’t just wing it with what you think might be “fair”. Speak to an expert, and work out what to pay, before somebody makes a complaint, and you have to speak to the Fair Work Ombudsman.

 

If you have any questions, or you’d simply like to know more,

Contact us NOW on (03) 9762 7344 

We’ll put you in right picture, so that you know exactly where you stand on Minimum Wages within your business.

 

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