Australia's national minimum wage and modern award pay rates
are set to increase by 2.5% starting July 1, 2015. On June 2, 2015,
the Minimum Wage Panel (the Panel) of the Fair Work Commission announced an increase to the minimum rates.
The increase will affect over 1.86 million employees in Australia
whose salary is at the minimum rate.
Each financial year, the Panel reviews the national minimum wage
and the minimum wages set out in modern awards. The modern awards
vary depending on the industry or the type of job, and cover
employee entitlements not only to minimum pay rates, but also to
allowances, loadings and other conditions of employment. Most
employees in Australia are covered by one of the 123 modern
To be covered by a modern award, an employee must work in an
industry covered by the award and/or work in a job classification
that is covered by the award. Often, more than one modern award
will apply to a single workplace depending upon the jobs its
Employers should note that an employee who holds a
"professional" or "managerial" position within
an organization should not automatically be deemed award-free. High
income employees, however, are excluded from modern awards. A high
income employee is an employee who has entered into a contract
setting forth a guarantee of annual earnings and the guaranteed
annual salary is no less than $133,000 as of July 1, 2014. This
threshold is expected to increase to between $135,000 and $137,000
as of July 1, 2015, but is yet to be determined.
If employees are not covered by a modern award (or a registered
workplace agreement) they are considered to be award- (and
agreement-) free and are thereby entitled to at least the national
minimum wage. Also as of July 1, 2015, the new national minimum
wage will be $656.60 per week or $17.29 per hour for a full-time
employee working 38 hours per week, which represents an increase of
$16.00 per week or 42 cents per hour.
It is advisable for companies with operations in Australia to
review their employee pay rates, in particular the pay rates of any
lower-level employees, to ensure that they will be compliant with
the new rates effective July 1, 2015. Employers that fail to comply
with legally mandated minimum employee benefits, such as these pay
rate increases, can be subject to penalties of up to $10,200 AUD
(currently $7,857.77 USD) per offense for individuals and up to
$50,100 AUD (currently, $38,595.54 USD) per offense for
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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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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