The Australian Fair Pay Commission (AFPC) handed down its second annual determination at 11.00 am today.

In today’s determination, the AFPC increased minimum wages as follows:

  • For employees earning a minimum wage rate of under $700 per week, the increase is $10.25 per week.

  • For employees earning a minimum wage rate of $700 per week or more, the increase is $5.30 per week.

These increases apply to all Australian Pay and Classification Scales.

The increases do not apply to employees covered by AWAs or certified agreements approved prior to the commencement of WorkChoices (27 March 2006) or employees covered by Preserved State Agreements.

If your employees are covered by AWAs or a collective agreement made since 27 March 2006, they must be paid at a rate that is at least equal to the relevant Pay Scale as increased by the decision. This may mean that no increase is payable to some employees and a partial increase only is payable to others.

The increase is effective from the first pay period on or after 1 October 2007.

The decision is intended to balance the sensitivity of low-paid employment to wage movements ("demand") with incentives for people to seek and remain in paid employment ("supply").

The decision follows on the heels of the AFPC’s 2006 decision, made on 26 October 2006 and effective from 1 December 2006.

The ACTU had been pushing for an increase of $28.00 per week. Employer groups were significantly more conservative, particularly because of the short period since the last increase was awarded. The Australian Industry Group requested an increase of $10.00 per week, effective from 1 September 2007. ACCI submitted that there was nothing to justify any wage increase less than 12 months from the previous increase in 2006. Hence, the AFPC determination represents a less generous outcome than was anticipated.

Given the level of confusion that still exists in the new system for many employers concerning Pay Scales applicable to their business, employers should obtain advice on these issues, to ensure that any required wage adjustments are accurately made.

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.