2011 Annual Wage Increase and ongoing transitional provisions
in Modern Awards
Minimum Wage Panel Decision
On 3 June 2011, the Minimum Wage Panel of Fair Work Australia
(FWA) handed down the Annual Wage Review 2010-2011
The Minimum Wage Panel considered that a uniform percentage
increase, rather than a flat dollar increase, should be made to the
national minimum wage and modern award rates, as this would best
ensure that the relativities between different award levels would
not be 'compressed', and the real value of minimum award
wages would be maintained.
The Minimum Wage Panel determined that a percentage increase of
3.4% should be made to the national minimum wage
and modern award rates, with weekly wages rounded up to the nearest
ten cents. Fair Work Australia has published draft determinations
varying the modern awards and the increases are scheduled to take
effect from the first pay period on or after 1 July 2011. There
will also be increases in award allowances and an increase in the
minimum rates for junior employees, apprentices and trainees.
Ongoing Transitional Provisions
It is important for employers to be aware that, for award
covered employees, the transitional provisions set out in modern
awards (introduced to adjust for changes arising from the creation
of modern awards) still apply from 1 July 2011.
For the year 2011-12, in addition to the annual wage increase,
most modern award wage rates will be adjusted (either up or down)
by 60% of the relevant transitional amounts, rather than 80%, as
was the case for year 2010-11.
In addition, award loadings and penalty rates will be adjusted
to reflect the new transitional amounts. Making this task more
complex is the fact that the Fair Work Ombudsman have determined
different methods of calculating transitional loadings, depending
on whether they consider that the old award entitlement is
'equivalent' to the new award entitlement.
Implications for Employers
The annual wage increase and transitional provisions are
relevant for general award compliance, as well as for the purposes
of meeting the BOOT for enterprise agreements under the Fair
Work Act 2009. In a recent FWA decision, approval of an
enterprise agreement was refused in part due to the employer's
failure to explain to employees that the rates and penalties
underpinning modern awards would increase under the transitional
It is crucial that employers who rely on modern award conditions
are aware of the 2011 changes and calculate up-to-date wage rates
and loadings accordingly.
We have developed detailed calculation tools to assist clients
to identify award wage rates in light of the annual wage increase
and new transitional provisions.
Employer Paid Parental Leave Payroll Obligations
From 1 July 2011, employers must administer government funded
Parental Leave Pay (PLP) to eligible employees.
PLP is to be paid in accordance with the employee's normal pay
cycle, with the usual PAYG withholding arrangements applied.
Employers will have to provide their bank account details, the
employee's pay cycle and pay cut-off details to Centrelink in
order to receive PLP funds; these will be transferred to the
nominated bank account either fortnightly or in three six-weekly
instalments. Employers will have the additional administrative
obligations of providing employees with a pay slip recording PLP,
including PLP in the employee's periodic payment summary and
keeping financial records of funds received and administered.
In preparation for the changes being operative from 1 July 2011,
register for Centrelink Business Online Services to enable them
to receive online Centrelink support;
register for an AUSkey which provides an online management
facility for employers to add or update bank details and new users
ensure payment records and processes are updated to provide for
recording obligations; and
update PAYG arrangements to include PLP.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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