Transitioning with the Federal Minimum Wage Increase
September 9, 2010
Whether you are covered by an enterprise agreement or a Modern Award, everybody may be affected by transitioning.
From 1 July 2010, the Modern Awards wage, casual loadings and weekend penalty provisions came into effect. For most Modern Award covered employees, this requires their employer navigating the transitional schedule of the relevant Modern Award.
A small percentage of Modern Award’s have different transitioning provisions to the majority. Some examples are the Cleaning Services Award 2010 and the Social, Community, Home Care and Disability Services Industry Award 2010.
The second major change on 1 July 2010 was the Federal Minimum Wage Increase. As there was no increase in 2009, Fair Work Australia have somewhat made-up for this by providing a relatively high weekly increase of $26.00 or $0.69 per hour.
The transitioning of the Federal Minimum Wage Increase in circumstances where the pre-1 January 2010 wage was higher than the Modern Award rate as at 30 June 2010 is particularly complex.
If the pre-1 January 2010 wage is up to $0.69 per hour greater than the Modern Award rate, this difference can be fully absorbed into the Federal Minimum Wage Increase. For example, if the 1 January 2010 wage rate was $0.30 per hour higher than the Modern Award rate as at 30 June 2010, this $0.30 can be offset against the $0.69 per hour Federal Minimum Wage Increase making the actual increase $0.39 per hour.
Where the pre-1 January 2010 wage rate is more than $0.69 higher than the Modern Award rate this difference is transitioned through five equal annual instalments. For example, if the 1 January 2010 wage rate was $1.00 per hour higher than the Modern Award rate as at 30 June 2010, the employee would be entitled to an increase of $0.49 per hour being the full Federal Minimum Wage Increase of $0.69 less 1/5th of the $1.00 per hour difference.
Employers covered by an Enterprise Agreement must, from 1 July 2010, ensure that the minimum rates of pay in the enterprise agreement are equal to or greater than the transitional rates of pay of the Modern Award. Therefore, it is important to know which awards would have covered the employees pre-1 January 2010 and what Modern Award would cover them now.
To ensure that your transitional calculations are correct, or to be certain that your enterprise agreement rates of pay are not lower than the relevant transitional rates, contact Travis Lancaster or your Livingstones Consultant.
