Minimum Wage Increase

Updated: Jun 28, 2021

We know you are aware of the increase, but are you aware of when it kicks in for your business?

As part of the annual wage review, the Fair Work Commission has ordered a 2.5% wage increase to the national minimum wage and awards.

The new national minimum wage will be $772.60 per week or $20.33 per hour. This constitutes an increase of $18.80 per week to the weekly rate or 49 cents per hour to the hourly rate. It is the first time the minimum adult wage is above $20 per hour.

This rate is higher than the increase which was ordered last year of 1.75%.

In conjunction with the Federal income tax cuts ranging from $10 to $44 per week that applies for low and medium taxpayers from July 2021, this constitutes a significant increase in take home pay for a large proportion of the workforce.

For many employers who are still impacted by the effects of COVID – particularly those affected by lockdowns in Victoria's recent lockdowns and now the rest of the country at various stages of lockdown – the over CPI wage increase together with the 0.5% increase to statutory superannuation, will be a significant burden on cash flow.

Timing of the increase Historically, increases to the national minimum wage and modern award minimum wages have taken effect from the first full pay period on or after 1 July. For a majority of modern awards this will still be the case in 2021.

However, the Fair Work Commission once again activated the ‘exceptional circumstances’ clause in the Fair Work Act 2009 to delay the operative date for some industries that continue to be impacted by COVID.

As was the case in last year’s decision, the Commission determined different operative dates of the wage increase for different groups of modern awards. There are 3 operative dates – July, September, and November:

Group 1 – 1 July 2021 (Click here for full list) Most modern awards will see minimum wages increase by 2.5%, as normal from the first full pay period on or after 1 July 2021.

Group 2 – 1 September 2021 In light of the impacts of COVID on the retail sector, the Commission considered that businesses covered by the General Retail Industry Award 2020 faced exceptional circumstances that allow a delayed operative date for the 2.5% increase from the first full pay period on or after 1 September 2021.

Group 3 – 1 November 2021 (Click here for full list) The modern awards in Group 3 cover workers in other industries that are still feeling the impacts of the pandemic, such as those in the aviation and tourism sector, the fitness industry, and “certain retail trade sector awards”.

The Commission was satisfied that there were exceptional circumstances that allow a delayed operative date for the 2.5% increase for employers in those industries from the first full pay period on or after 1 November 2021.

What Should You Do? From 1 July 2021, employers must satisfy the new minimum payment obligations for all relevant staff.

Employers should now carefully review their wage arrangements and implement the necessary wage increases to ensure minimum wage rates are at least commensurate with the underpinning modern award.

Employers paying above-award payments should also review such arrangements to ensure that they are high enough to accommodate the increases (provided they are also supported by the necessary individual flexibility or other agreements).

Further, as a minimum, from 1 July 2021 employers’ minimum superannuation contributions will be increased to 10%. For more information on the Superannuation increase please read our blog

Please reach out to the team at DreamStoneHR if you need any support on increases or new Award mimumums.

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