The Fair Work Commission (FWC) handed down its Annual Wage Review decision yesterday. We detail below the FWC’s increase to the National Minimum Wage and rates under modern awards. With the start of the new financial year just around the corner, employers should be aware of new employment related thresholds that apply from 1 July 2022.
National Minimum Wage
The FWC has increased the national minimum wage. From 1 July 2022, the national minimum wage will increase to $812.60 per week or $21.38 per hour. This is an increase of $40.00 (or 5.2%) to the current national minimum weekly rate. A casual loading of 25% applies to award/enterprise agreement free casual employees. Percentages for junior employees apply as set out in the miscellaneous modern award.
Two national minimum wage rates apply to employees with a disability: $812.60 per week or $21.38 per hour based on a 38-hour week (for employees with a disability whose productivity is not affected) and otherwise an assessment under the supported wage system, subject to a minimum payment fixed under the Supported Wage System Schedule.
The FWC’s national minimum wage order will also contain the apprentice wage provisions and the National Training Wage Schedule in the miscellaneous modern award for award/agreement free employees to whom training arrangements apply and certain transitional provisions.
Minimum award wage rates
The FWC has increased minimum wage rates in modern awards by 4.6% subject to a minimum increase for adult award classifications of $40 a week, which is based on a 38-hour week for a full-time employee.
Modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent adjustment. Wage rates below $869.60 per week will be adjusted by $40 per week. The casual loading will remain at 25%.
Variation of modern awards
The FWC noted that exceptional circumstances exist such as to warrant a delayed operative date for modern awards in the aviation, tourism and hospitality sectors. The variation determinations in respect of the following awards will be operative from 1 October 2022:
- Aircraft Cabin Crew Award 2020
- Airline Operations – Ground Staff Award 2020
- Air Pilots Award 2020
- Airport Employees Award 2020
- Airservices Australia Enterprise Award 2016
- Alpine Resorts Award 2020
- Hospitality Industry (General) Award 2020
- Marine Tourism and Charter Vessels Award 2020
- Registered and Licensed Clubs Award 2020
- Restaurant Industry Award 2020
For all other modern awards, the operative date for the increase is 1 July 2022.
From 1 July 2022, employers must contribute 10.5% of an employee’s ordinary time earnings to a complying superannuation fund.
The removal of the threshold of $450 per month (before tax) under which employees do not need to be paid the superannuation guarantee by their employer will apply from 1 July 2022.
Redundancy tax threshold
From 1 July 2022, the tax-free component of a genuine redundancy payment is as follows: base amount of $11,591 and the service related amount of $5,797.
High income threshold
The FWC is yet to publish the high income threshold which will apply from 1 July 2022. The threshold means:
- employees cannot file an unfair dismissal claim if their annual earnings are at least at the threshold amount unless they are covered by a modern award or enterprise agreement; and
- the maximum compensation that can be awarded to an employee in unfair dismissal proceedings will be 50% of the threshold amount.
The new threshold will be published at this link.
If you have any queries about the new rates and thresholds, please do not hesitate to contact the G+T employment team.
Authors: James Pomeroy and Ravi Dutta