Is your business ready for a 2.4pc wage rise?

Is your business ready for a 2.4pc wage rise?

Australian SMEs are eagerly awaiting for the Fair Work Commission to hand down its yearly decision on what the new national minimum wage will be. The decision could land any day now and SMEs are rarely equipped for interpreting and applying the changes for their business, writes Ed Mallett.

My prediction is that the national minimum wage is likely to increase by no more than 2.4 per cent this July, which may mean the hourly minimum wage will just break past the $18 mark.

Currently, the national minimum wage of $672.70 per week is calculated on the basis of a 38-hour week, or $17.70 per hour.

This prediction is based on past behaviour of the commission, the minimum wage trend, the influences of the employment rate, the GDP trends and inflation rate.

Australia is an overly developed economy and all these factors come into play when the commission sets the new national minimum wage.

Another factor in this forecast is the significant penalty rate cuts that have been announced in February.

It seems the commission’s decision to cut penalty rates in the retail and hospitality sector is a clear response to business groups that strongly argue that cutting their wage bills would lead to the creation of more jobs and greater business productivity.

Nevertheless, our small business clients tell us that there’s still a lot of pressure. Any and every wage increase impacts the bottom line of SMEs and will not be welcomed.

Australian SMEs create jobs, wealth and revenue without employment opportunities in business, Australians’ living standards would drop.

It’s seriously important that employers check which award their employees are covered by.

The national minimum wage is applicable for employees not covered by an award. Most employees are covered by an award, and therefore each award rate is different.

Historically, award rates see the same percentage increase as the national minimum wage.

What happens next?

Each national minimum wage order made in an annual wage review comes into operation on 1 July in the next financial year, and continues in operation until the next national minimum wage order comes into operation.

At the end of the review, the commission will issue its decision. This will be followed by the publication of determinations changing the minimum wage rates in modern awards, and a national minimum wage order for employees who are not covered by an agreement or award.

It usually takes the commission two to three weeks to update the pay rates in each award. Employers need to listen out for announcements and visit the Fair Work Commission and Fair Work Ombudsman websites for updates.

Ed Mallett commenced his career as an employment barrister in London and, following a move to Sydney, founded Employsure in 2011.

Is your business ready for a 2.4pc wage rise?
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