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On 3 June 2011 Fair Work Australia handed down its Annual Wage Review for 2011.
This is the second one of these decisions since the Fair Work Act was introduced. You might remember that under Work Choices national wage rates were reviewed by the Fair Pay Commission which was supposed to base its decisions on economic data and was also supposed to conduct itself not as a court hearing a case but as an independent body making an analytical determination.
Now the task of reviewing wages annually is done by Fair Work Australia and it seems to be a compromise between the old system (where the Australian Industrial Relations Commission would conduct contested hearings) and the Fair Pay Commission idea. Anyway the process is now based on various parties (the ACTU included) making written submissions which FWA tries to analyse and accommodate.
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What is the outcome of the 2011 Review?
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The outcome is a 3.4% increase in modern award minimum wages from 1 July 2011. This seems simple enough but for reasons which elude us here at WAG some commentators got it into their heads that all FWA was doing was increasing the national minimum wage. This is not the case!! All modern award rates went up by 3.4% effective 1 July 2011 and that is what the decision actually says.
WAG clients can check their award rates on the FWA website which is www.fwa.gov.au.
Checking is a worthwhile exercise because FWA has published some draft determinations which helpfully list the new award rates. You will also notice that expense related allowances have gone up as well so check the website for the relevant figures for your industry.
Many WAG clients have their own workplace or enterprise agreements with their workforces and/or with unions. Most of those agreements will have a clause which says that the wage increases occurring under the agreement itself will absorb any increase from the National Wage Review process (or we hope you have that clause in there!!).
If you don't have an absorption clause you will have to put the 3.4% increase on your wage bill or you will find employees and unions knocking on your door. More importantly, if you do have an absorption clause make sure that your agreement wage rates are still in front of the relevant award rate after the 3.4% increase is applied. If your agreement rate falls behind the award rate then you have to adjust it to meet the award rate at least.
Mark Diamond, Principal
Greg Selig, Senior Consultant
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