Minimum wage increase 2 min read
With multiple challenges facing employers, both now and in the year ahead, it's important not to forget the key changes that come into effect on or after 1 July.
Employees need to be mindful of increases to minimum rates of pay, as well as the impact of increases to the high income threshold and the maximum super contribution base.
From 1 July 2020, the minimum wage has increased by 1.75%, or $13 per week. The new national minimum wage is $19.84 per hour, or $753.80 per week.
The increase applies to any employee who is paid according to the national minimum wage or under a modern award, including those participating in the JobKeeper scheme who are paid their usual pay rather than the amount of the JobKeeper payment. Fewer employees are likely to be paid the national minimum wage given the increase in coverage of the Miscellaneous Award 2020, which also came into effect on 1 July.
The Fair Work Commission acknowledged the significant downturn in our economy given COVID-19 and the limited capacity of employers to absorb wage increases at this time. In light of that, for those paid under a modern award, the increase is staggered with the increase starting earlier for the lesser economically affected industries:
- On 1 July 2020 the increase came into effect for modern awards covering frontline healthcare and social assistance workers, teachers and childcare workers and other essential services.
- On 1 November 2020 the increase will take effect for modern awards covering the construction, manufacturing and other industries.
- On 1 February 2020 the increase will take effect for modern awards covering the accommodation and food services industry, arts and recreation services, aviation, retail and tourism.1
The high income threshold increased on 1 July to $153,600 per annum, up from $148,700 per annum. This is an important figure to keep in mind if faced with an unfair dismissal claim and when entering into a high income guarantee arrangement with an employee.
The maximum contribution base sets the cap on the ordinary time earnings on which superannuation contributions must be made. No contributions are legally required to be made on ordinary time earnings that exceed the maximum contribution base. Since 1 July the maximum contribution base is $57,090 per quarter, up from $55,270 per quarter.
For further information and a complete list of the timing for particular modern awards, see https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/the-commission-has-announced-a-1-75-increase-to-minimum-wages#when-will-my-award-increase