Australia’s National Minimum Wage
Each year the Fair Work Commission undertakes an Annual Wage Review which usually results in an increase to the National Minimum Wage and modern Awards from the first full pay period on or after 1 July.
This guide has been created for employers to better understand the minimum wages and entitlements under the Fair Work Act 2009.
2022-2023 Minimum Wage
Effective 1 July 2022, the National Minimum Wage will increase by 5.2% to $21.38 per hour or $812.60 per week for a standard 38-hour week (before tax).
This increase represents a $40.00 per week increase to the full time adult weekly rate for award free/agreement free employees.
Casual employees covered by the national minimum wage are entitled to a 25% casual loading.
What is the National Minimum Wage
Each year, the Fair Work Commission undertake a review of the National Minimum Wages and issues the National Minimum Wage Order which sets the National Minimum Wage for award-free employees.
The decision to increase the National Minimum Wages from the first full pay period on or after 1 July applies to all businesses and employees that fall under the Fair Work system. The Fair Work system applies to all businesses and employees engaged in the national workplace relations framework and covers four major components:
- National Employment Standards,
- industry-specific awards,
- the national minimum wage, and
- protection from unfair dismissal.
The Fair Work Act 2009 applies to majority of private Australian businesses and employees. However, some business such as sole traders that are not constitutional corporations in Western Australia are not covered by the Fair Work Act.
It is critical business owners understand the requirements under the Fair Work Act. If you’re unsure how the Fair Work Act or national workplace relations framework applies to your business, contact us for free initial advice.
Who does the National Minimum Wage apply to?
All employees that fall under the national workplace relations framework are entitled to minimum wages as prescribed by Fair Work. The National Minimum Wage applies to employees that are not covered by a modern award, however most employees are generally covered by a modern award or enterprise agreement and will be subject to the minimum wage, as well as other terms and conditions of the applicable modern award or enterprise agreement.
Part time employees are also entitled to the relevant minimum rates of pay, prorated according to their hours of work.
A casual employee has no firm advance commitment to ongoing work and are entitled to a casual loading as they are not entitled to things like paid sick leave, annual leave, or termination notice.
The casual loading percentage is set out in the applicable workplace instrument such as a modern award or enterprise agreement covering the employee. Where the employee is award free, the casual loading is set out in the National Minimum Wage Order.
When the new minimum wages come into effect?
The decision to increase the National Minimum Wages applies from the first full pay period on or after 1 July applies to all businesses and employees.
In most modern awards the minimum wage also comes into effect from the first full pay period on or after 1 July.
Taking into account various economic considerations, the Fair Work Commission -Annual Wage Review panel found that there were certain industry sectors covered by modern awards which warranted a delayed operative date in 2022.
The wage increase will apply from the first full pay period on or after 1 October 2022:
- Air Pilots Award 2020
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Alpine Resorts Award 2020
- Hospitality Industry (General) Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Registered and Licensed Clubs Award 2020
- Restaurant Industry Award 2020
I pay my employee is paid well above the minimum wages, do I need to apply the increase?
An employer may elect to pay an employee above the relevant minimum wage outlined in the National Minimum Wage Order, Award or Enterprise Agreement, however it is critical that you monitor the wage increases each year to ensure that the current salary or wages paid to an employee continue to remain above the relevant minimum wage.
Failure to review wages regularly may result in an employee being underpaid and risk facing a Fair Work claim and possible fines/penalties.
If you’re unsure how the Fair Work Act or national workplace relations framework applies to your business, contact us for free initial advice.