Annual Wage Review 2023: what your business needs to know
Annual Wage Review 2023: what your business needs to know
If you’re the owner of a business that employs staff, you probably already know about minimum wage. But have you heard about the recent minimum wage increase, which will see this increase by between 5.75 and 8.6%? In this week’s blog post, we will be looking at what this minimum wage increase is, and what this means for you and your business.
Minimum wage is the lowest amount that you are legally permitted to pay your employees. The legal minimum wage is something that is continuously reviewed and re-assessed to ensure that this is fair to employees, and appropriate in the context of things like inflation and rising costs of living. This review process, known as the Annual Wage Review, is undertaken each financial year by the Fair Work Commission.
As part of this review, the current minimum wage being offered is assessed. If this is deemed to be inappropriate or inadequate, a new minimum wage may be set, which is what has occurred in this recent decision by the Fair Work Commission.
At present, employees who are paid the national minimum wage are legally entitled to receive a minimum of $812.60 a week, or $21.38 an hour. However, the national minimum wage is set to increase by $8.6%, meaning these employees will now earn $882.90 a week, or $23.23 an hour. This will work out to an increase of around $70 per week, representing an 8% overall increase.
Minimum wage employees who work on an award rate (meaning they are entitled to receive the minimum pay rates outlined in their award agreement, which may be higher than the national minimum wage) will also benefit from this minimum wage increase.
At present, minimum wage award employees are legally entitled to receive a minimum of $812.60 a week, or $21.38 an hour. Under the national minimum wage increase, this will jump to $859.32 a week, or $22.61 an hour – working out to roughly $50 extra per week. This represents a 5.75% increase, which will be added to the base award rate (that is, the minimum you can pay an employee who is classified at that level).
All employers and businesses who pay their employees minimum wage (using either the national rate or award rate) will be affected by this increase, with the changes coming into effect during the first pay period on or after July 1, or the start of the new financial year.
Basically, what this means for your business is that you will need to start paying any of your employees who are currently paid minimum wage in line with these new pay rates. Continuing to pay your employees at the old national minimum wage or award rates will mean you are in breach of the law. This could put you and your business at risk of facing some hefty financial and legal penalties.
Fortunately, there are things that you and your business can do to ensure you remain compliant with the minimum wage increase. For one thing, we recommend using the end of the financial year as an opportunity to review how much you are paying your employees – particularly those who are paid minimum wage.
You will also need to ensure that you make the necessary adjustments to their rate of pay before the end of the financial year, to ensure that they are being paid at the new minimum wage rates for all pay runs from July 1.
If you need help to review pay rates of your or want to check whether your business is compliant, we can help. For more information, get in touch with us today at hello@mmchr.com.au or 07 4243 5977.