INDUSTRIAL CIRCULAR 4/2017
Date: 7 June 2017
Subject: National Wage Case Decision
The Decision
The Fair Work Act 2009 (the Act) requires the Fair Work Commission’s Expert Panel (Minimum Wage Panel) to conduct and complete a review of minimum wages in modern awards and the national minimum wage in each financial year. The Minimum Wage Panel of the Fair Work Commission released its National Wage Case (NWC) decision yesterday, on Tuesday, 6 June 2017.
The decision provides that:
- All Modern Award classification rates shall increase by 3.3% rounded to the nearest 10 cents (in 2016 the increase was 2.4%)
- Most Award allowances will also increase by 3.3%. However, those that are expense related will be increased according to a different formula, based around CPI.
- The federal minimum wage for award free employees shall be $694.90 per week (rounded to the nearest 10 cents) or $18.29 per hour. The hourly rate has been calculated on the basis of a 38 hour week for a full-time employee. This is an increase of $22.20 per week (or 59 cents per hour).
- As in previous years, these increases shall apply from the first pay period (ppc) on or after 1st July.
- This means that all transport award classifications shall increase by 3.3% from ppc 1 July 2017.
Background
The ACTU had sought an increase of $45 per week, while major employer groups had submitted that an increase of between $8 and $12 per week should be awarded.
The Minimum Wage Panel in their Statement [2017] FWCFB 3501 stated:
“The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their relative living standards.
The key changes in the economic environment in this Review are:
(i) Real net national disposable income increased by 6.8 per cent over the year to the December 2016, after it fell in the previous year.
(ii) All measures of inflation have increased since the March quarter 2016, but are currently at the lower end of the RBA’s medium-term target range (CPI increased by 2.1 per cent over the year to the March quarter 2017).
(iii) Over the 5 years to the December quarter 2016, labour productivity growth in the market sector was higher than the previous 5-year period and rose sharply in 2016.
(iv) On an annual basis, profit growth was particularly strong in 2016 compared with the preceding years and above the 5-year and 10-year averages for both total industries and non-mining industries.
(v) The principal business conditions surveys show that the assessment of business conditions is positive and above long-term average levels.”
Implications
Members who have Workplace Agreements (EBAs) in place will need to ensure that their EBA rates meet or exceed the new minimum award rates and if the agreement pay increases are linked to the NWC’s decision, the pay rates will need to be adjusted within the EBA accordingly.
The increases can be absorbed into any amounts now being paid over and above the relevant minimum rates. However, it should be noted that the Fair Work Ombudsman makes it clear that over award pay-rates can NOT be off-set against other award entitlements (e.g. penalties or loadings) unless there is formal agreement in place. Rates for juniors, trainees and apprentices will also be adjusted, as usual, on a proportionate basis.
Next Steps
Each Award needs to be varied individually to give effect to this decision as allowances will also increase in accordance with this 3.3% amount or where they are expense related with the relevant CPI measure. The ARTIO will keep you advised and will issue detailed Industrial Circulars covering each particular award when those Determinations have been issued by the FWC.
For further information on these or any specific industrial matters:
Please contact Paul Ryan, our industrial adviser on Ph: (03) 9646 8590, or email reception@vta.com.au