Australia: Update To Employers: The Australian Fair Pay Commission Recently Handed Down A Decision Increasing The Federal Minimum Wage

Last Updated: 14 July 2008
Article by Michael Flynn and Georgie Evans

The Australian Fair Pay Commission made its third minimum wage determination on 8 July 2008. In its decision, the Commission awarded an across-the-board $21.66 per week pay increase to employees on minimum rates.

The 2008 Australian Fair Pay Wage Commission Decision will come into operation from 1 October.

Effective from the first pay period from 1 October 2008:

the Standard Federal Minimum Wage increases by $0.57 per hour (or $21.66 per week) to $14.31 per hour (or $543.78 per week).

In previous years, the increase in wages was set to different levels depending on the weekly income of the employee. The 2008 Decision applies the increase "across-the-board", therefore effective from the first pay period from 1 October 2008:

  • all adult employees will receive an increase of $21.66 per week (i.e. an increase of $0.57 per hour).

If you have any queries as to the application of this increase to your individual business or Workplace Agreement, please contact one of the gadens lawyers' workplace relations team.

Award Modernisation

Earlier this year, the Minister for Employment and Workplace Relations, Julia Gillard, signed a formal request to the President of the Australian Industrial Relations Commission for the creation of a system of modern awards to operate in conjunction with the new Australian workplace relations system foreshadowed by the Rudd government to commence in January 2010.

Part of the award modernisation process included consultation with major workplace relations stakeholders and other interested parties on priority industries and occupations for award modernisation, the development of a model flexibility clause and the setting of a timetable for the modernisation process.

In a decision on 20 June 2008, the seven-member award modernisation Full Bench of the Australian Industrial Relations Commission (the Commission) made a determination on priority awards, the model flexibility clauses to be used in agreements between employers and individuals, and finalised its timetable for the process.

Priority Awards

In its decision, the Commission indicated their intention to make 14 priority modern awards, to include one occupation (clerks in the private sector) and 13 industries:

1. coal mining;

2. glue and gelatine;

3. higher education;

4. hospitality;

5. metal and associated industries;

6. mining;

7. racing;

8. rail;

9. retail;

10. rubber, plastic and cable making;

11. security;

12. textile, clothing and footwear; and

13. vehicle manufacturing.

The Commission also indicated that on 10 October 2008 it would announce a list of industries and occupations that will be given early attention even though they were not on this priority list. The Commission suggested that such industries may include agriculture, banking services, building, metal and civil construction, cleaning, finance and investment, graphic arts, health and welfare, insurance, information and communications technology and private road transport.

Model Flexibility Clause

The Commission has also published its new model flexibility clause. This clause does not allow for agreements to be made between employer and a majority of employees as the request from the Minister indicated the model flexibility clause should provide for agreements between the employer and individual employees.

Therefore, under this clause an employee and an employer can individually agree to certain specified flexibilities contained within the clause. The flexibilities are:

1. arrangements for when work is performed;

2. overtime rates;

3. penalty rates;

4. allowances; and

5. leave loading.

Such an agreement must be in writing, and effectively pass a no disadvantage test in relation to the individual employee.

The decision also indicated that:

  • the no-disadvantage test will apply at the time the agreement starts to operate without a need for ongoing review;
  • there should be no inhibition on an individual employee seeking advice from their union or other representative, but the operation of such a clause "should not be made contingent on union notification, union involvement in the process or union consent";
  • there will be no separate dispute settlement procedure in the model clause, in order to provide consistency in modern award terms as far as is possible; and
  • the termination clause will provide that either party will be able to terminate it by giving four weeks' notice in writing.

The Commission has indicated that exposure drafts of the new priority awards will be published by 12 September 2008. Following this, a further consultative process will occur and the final priority awards will be published by 19 December 2008.



Kathryn Dent

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Mark Sant

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Ian Dixon

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Dan Feldman

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Steven Troeth

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John-Anthony Hodgens

t (07) 3231 1568




Nicholas Linke

t (08) 8233 0628


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