The Fair Work Commission (FWC) undertakes the National Wage Case each year to determine if, and to what level the minimum wage should be increased. The FWC handed down the decision (Full decision: https://www.fwc.gov.au/documents/resources/2023fwcfb3500.pdf, Summary of Decision: https://www.fwc.gov.au/documents/resources/2023fwcfb3501.pdf ) that the minimum wage will be increased by from the first pay period on or after the 1st July 2023. This will have an impact on the base rate in all Modern Awards.
The decision will have a flow on effect to all of the Modern Awards and will result in increases in the base rates that are applicable in all Awards. In the coming weeks, the FWC will release draft and then final Determinations for each of the Awards.
“The draft and then final Determinations will add clarity on these matters and ACAPMA will circulate them along with the new Wage Guides as soon as they are published”, says ACAPMA’s Elisha Radwanowski.
National Wage Case
The National Wage Case decision that has been handed down resulted in the minimum wage increasing 5.75%, to $ 882.80 a week or $ 23.23 per hour*.
In handing down this decision the Commission outlined that there is a relationship between the National Minimum Wage Determination and the Modern Awards, but draws out that the relationship is not direct or automatic.
The Commission identified that the change to the National Minimum Wage directly changes the Minimum Wage which applies to the 0.7% of Australian employees who are not covered by an Award or an Agreement and are thus directly paid the Minimum Wage.
“The direct effect of the Review upon the Australian employee workforce is limited. The NMW only applies to a very small proportion of the workforce: only 0.7 per cent of employees are paid the NMW. Approximately 20.5 per cent of employees are paid in accordance with minimum wage rates in modern awards. There are some additional categories of employees who are also affected by the Review in a less direct way by Review outcomes being ‘flowed on’ by various means,” explained the Commission.
The Commission also altered the comparison rate that the Minimum Wage is based on, changing from C14 to C13, resulting in an effective 8.65% increase for those Minimum Wage covered employees.
Considering the context of the nature of Minimum Wage covered employees and the current economic climate as well as the specific industry contexts when setting the individual Modern Award rates for the coming year along with the markedly weak performance in productivity growth the Commission also determined to increase Modern Award base rates by 5.75%.
The Awards for fuel wholesale, transport, retail and administration will have new rates effective the first full pay period on or after 1 July 2023.
This has a clear flow-on effect to the wage rates in all Modern Awards and thus requires all employers to review their employment instruments before the new rates come into effect.
Each year, the FWC reviews the cost of living, economy-wide productivity indicators and the general health of the Australian economy to determine if the minimum wage rates set in the Awards are commensurate with a living wage. While not all National Wage Cases result in an increase in the minimum wage, most do.
The 5.75% increase for the 2023/2024 year is lower than the 7% increase sought by employee groups, but represents a significant increase on the 3.5-4%, sought by employer groups.
| Year | Minimum Wage per hour | % increase on previous year |
| 2006 | $13.47 | |
| 2007 | $13.74 | 2.00% |
| 2008 | $14.31 | 4.15% |
| 2009 | $14.31 | 0.00% – No change |
| 2010 | $15.00 | 4.85% |
| 2011 | $15.51 | 3.40% |
| 2012 | $15.96 | 2.90% |
| 2013 | $16.37 | 2.60% |
| 2014 | $16.87 | 3.00% |
| 2015 | $17.29 | 2.50% |
| 2016 | $17.70 | 2.40% |
| 2017 | $18.29 | 3.30% |
| 2018 | $18.93 | 3.50% |
| 2019 | $19.49 | 3.00% |
| 2020 | $19.84 | 1.75% |
| 2021 | $20.33 | 2.50% |
| 2022 | $21.38 | 5.20% |
| 2023 | $23.23 | 5.75%* |
*The 2023 Decision also changed the comparison base rate used for the Minimum Wage calculations from C14 to C13, which resulted in an effective increase for 2023 of 8.65%
The Determinations that will actually vary the rates in the Awards, will be released next week and should be finalised a few days later.
ACAPMA Employment Quick Reference Guides
It is important for business operators to remember that the National Wage Case sets the Minimum Wage, but that the rates that must be provided to those working in the downstream petroleum industry will be changed by the FWC making formal amendments to the Awards, and that these changes are not always a simple increase by the standard percentage, especially for casuals in the retail sector. So, while we know today the new National Minimum Wage, we will have to wait for the final Determinations to vary the Awards before we have the final rates that will apply for 2023/2024 financial year.
“The National Wage Case Decision is only the first step in the process to getting the 2023/2024 wage rates, and ACAPMA has to wait until we have reached the last step before we circulate the new Wage Guides”, explains ACAPMA’s Elisha Radwanowski.
“Following the Minimum Wage Decision, the Commission then issues DRAFT Determinations for each Award. These Determinations are the mechanism for changing the actual Awards, and they are released for a time in DRAFT so that any errors or issues can be addressed before they are confirmed as Final Determinations which then change the Award. This Draft Determination stage is really important, and it is important for Members to understand that there are often changes at this stage, so anyone who is updating their payroll systems before the Final Determinations are released must ensure that they are double checking the system again after the final changes to the Award are made”, continues Elisha.
“Many businesses mess this step up. They hear the percentage that is announced with the National Wage Case Decision and they simply put their base rates up by that amount and then move on. In the fuel industry this is likely to result in errors in rates, particularly for casual console operators, due to the peculiar ‘hand set’ nature of those rates. This approach also will fail to capture increase to expense related allowances such as Meal Allowance or Travelling Allowance which will be hard set based on the Expense Criteria and not increase in the Minimum Wage”, Elisha adds.
“The big message is this, businesses should understand that they need to be ready to understand the changes that are coming and to be ready to update rates, review salary and IFA/Agreement modelling and communicate the changes to staff, but jumping the gun leads to rework at best, and wage rate issues or underpayments at worse, so don’t rush. The new wage rates will not apply until the first full pay period on or after the 1st of July 2023. What that means is that the new rates will not apply until the pay period has not got any days in it that were in June. So, there is time to wait for the Final Determinations and ensure updates are done once and done right”.
ACAPMA is eagerly anticipating the release of the draft Determinations next week and then final Determinations from the FWC, which are typically released around the third week of June. These Determinations will translate this minimum wage decision into changes to the Modern Awards. ACAPMA is ready to prepare and circulate the ACAPMA Quick Reference Guides to ACAPMA Members.
ACAPMA’s employment department produces Quick Reference Guides each year, to summarise key Award requirements, including finalised rates for:
- The Road Transport and Distribution Award 2020 for fuel tanker drivers,
- The Vehicle Repair Services and Retail Award 2020 for console operators, roadhouse and driveway attendants, and
- The Clerks Private Sector Award 2020 for clerical staff.
All employment instruments affected
While the National Wage Case directly changes the wage rates in the Modern Awards there is also a flow on effect to all employment instruments.
Employers who use direct contracts, enterprise agreements, individual flexibility agreements or racked rates must take the time to review the wage rates contained within those instruments as the National Employment Standards, which apply to all employees, provide for the Modern Award rates to be the basis for all wage rates, regardless of instrument.
All employers need to review the base rates in their instruments to ensure they are equal to, or above the levels set in, the Modern Awards after the National Wage Case increase.
Register now so you don’t miss out
The ACAPMA Quick Reference Guides will be sent to the Principle members upon their release; however, all members are encouraged to have the responsible persons in their business, such as payroll or workplace relations managers, register to receive these Guides on their release, to ensure they receive the information in a timely fashion.
To register to receive the ACAPMA Quick Reference Guides and other key workplace relations information please email employment@acapma.com.au to add key staff to the Employment distribution list.
Elisha Radwanowski BCom (HRM & IR)
ACAPMA
Source: https://acapmag.com.au/2023/06/national-wage-case-2023-implications/.
