Minimum wages to increase by 3.5%

The Fair Work Commission’s panel for annual wage reviews released its Annual Wage Review 2017-2018 decision on 1 June 2018.

The decision provides that minimum award wages will increase across the board by 3.5% effective 1 July 2018.

This decision will result in the following increases to the Federal minimum wage rates:

  • Weekly minimum wage: from $694.90 to $719.20 (increase of $24.30);
  • Hourly minimum rate: from $18.29 to $18.93 (increase of 64 cents).
    • The proportion of employees that are paid at the adult Federal minimum wage rate is estimated to be only around 1.9%. However, the 3.5% increase will also apply to the minimum rates of pay contained in all modern awards. Increases to minimum weekly wages will be rounded to the nearest 10 cents. The Panel determined that casual loading in modern awards will remain at 25%.
    • In fixing the increase at 3.5% (up on last years 3.3% increase), the Panel observed that modest and regular minimum wage increases do not result in dis-employment effects or inhibit workforce participation. The Panel did accept that there had been a decline in current enterprise agreement making for a number of reasons many of which are unrelated to increases in the national minimum wage and modern award minimum wages.

Employers should now start to review their employees’ existing rates of pay to ensure compliance with minimum rates when the above changes commence on 1 July 2018. It is also important for employers whose employees are covered by an existing enterprise agreement to review the actual rates of pay paid to these employees. Employers are required to ensure that agreement covered employees are paid no less than the equivalent base rate of pay that would be payable under the underlying modern award following the minimum rate of pay increase in all modern awards.

Annual Wage Review 2017-18 [2018] FWCFB 3500