Increases from 1 July 2011

The commencement of the new financial year saw an increase in Federal Minimum Wages and the high income threshold for unfair dismissal claims.

Federal Wage Increase

The Minimum Wage Panel from Fair Work Australia increased the Federal Minimum Wage to $589.30 per week (or $15.51 per hour) from 1 July 2011. They also increased the minimum wages in awards by 3.4%. This increase applies to all award wage rates from 1 July 2011.

Employers are to increase weekly wage rates for each classification in their relevant award by 3.4% and then the wage is to be rounded to the nearest ten cents. If employees are covered by an enterprise agreement, the wage rates will need to be reviewed to ensure that they are not less than the increased wage rates in the award. With the ability to phase-in wage rates in the modern awards, calculating how the minimum wage increase applies to the transitional wage rate is complicated but it’s vital that employers get it right from the outset. If employers are unsure they should seek advice.

High income threshold

On 1 July 2011, the high income threshold increased from $113,800 to $118,100 per annum. This means that employees who are not covered by an award and who earn $118,100 or more are excluded from commencing unfair dismissal proceedings. However, if an award applies to an employee, the employee will still be able to commence unfair dismissal proceedings regardless of their income level.

In addition, where an employee earns $118,100 or more, the employer and employee may agree in writing that the employee is excluded from the coverage of an award that otherwise applies. However, importantly, the award will still apply to the employee for the purpose of allowing them to commence unfair dismissal proceedings.

Key Point: Employers need to ensure they’ve passed on the recent wage increase to all award employees. They also need to review pay rates for employees receiving over-award salaries, or engage under enterprise agreements, to ensure they are not underpaid when compared against increased award rates.