How employers can ensure they are complying with the wage increase

Following the announcement that the minimum wage is set to increase from July 1, 2022, employers in Australia will be wondering what they need to do to comply with the changes. 

The increase means employers will now be required to pay their employees an extra 5.2% and $1.05 an hour. This includes a 4.6%  increase to minimum award wages with a $40 minimum increase. The Fair Work Commission said its decision would affect over 2.7 million workers, as well as other employees on enterprise agreements and other pay settings. 

All Australian employers (or overseas companies with local employees) now need to seriously review their employees’ wages to ensure that they meet the new minimums.

It is vital for employers to note that the minimum rate of pay is in addition to the other award entitlements like loading and allowances. Significant penalties can be imposed in the event of underpayment, even if the underpayment is unintentional. Underpayment of wages impacts the relationship between employer and employees as well as generating adverse publicity which can impact the employer’s brand, good will and place within the market. 

How can employers ensure they on the right track?

So how can employers ensure they are following the correct guidelines? Here is how to make sure you’re not overcompensating the new increased wages or underpaying your staff.  

Become familiar with the NES

The national minimum wage and the National Employment Standards (NES) make up the minimum entitlements for employees in Australia. An award, employment contract, enterprise agreement or other registered agreement can’t provide for conditions that are less than the minimum wage or the National Employment Standards, they must include the NES.

Employers should ensure they provide every new employee with a copy of the Fair Work Information Statement (FWIS) when they start their new job. And every casual employee needs to be given a copy of the Casual Employment Information Statement (CEIS).

Refer to the Fair Work Ombudsman pay guide

To ensure employers understand how much each employee is entitled to be paid under the new minimum wage adjustment, the Fair Work Ombudsman places a significant focus on working with employers to ensure they understand their obligations. Employers can use Pay and Conditions Tool to  calculate their employees’ wages, penalty rates and allowances. 

Enterprise agreements and all-inclusive salaries 

When employees are covered by an enterprise agreement, ensure that the base rates of remuneration or pay provided under that agreement are at least equivalent to the new minimum rates of pay under the applicable award or the minimum wage order.

Employers who use ‘all-inclusive’ salaries (such as via set-off clauses in their employment contracts or by using annualised salary arrangements) need to ensure that the salary “buffer” is sufficient to cover off all of the employees’ minimum entitlements each pay period.

Get the right advice

The legislation around fair work regulations are always evolving and it can be challenging to stay up to date on all your obligations as an employer. Employment lawyers specialise in staying across the latest changes and will give you advice to ensure you are being compliant.

For instance, as an advisory firm, BlueRock has a range of employment law experts who can assist employers and businesses in ensuring they meet the minimums for their employees and how this can not only be a bonus for their employees, but as well as for their business. 

Catherine Stephens is the Associate Director of Employment Law at professional services consultancy BlueRock.