Following the announcement that the minimum wage is set to increase from July 1, 2022, many employers Australia-wide will be wondering how this affects them, and what they need to do to comply with the changes.

The increase means employers will now be required to pay their employees an extra 5.2 per cent and $1.05 an hour. This includes a 4.6 per cent increase to minimum award wages with a $40 minimum increase. The Fair Work Commission said its decision would affect more than 2.7 million workers, as well as other employees on enterprise agreements and other pay settings.

According to Catherine Stephens, Associate Director of Employment Law at professional services consultancy BlueRock, all Australian employers (or overseas companies with local employees) now need to review their employees’ wages to ensure that they meet the new minimums.

“It is important for employers to note that the minimum rate of pay is in addition to the other award entitlements such as loading and allowances. Significant penalties can be imposed in the event of underpayment, even if the underpayment is unintentional,” she says.

“Underpayment of wages also impacts the relationship between employer and employees as well as generating adverse publicity which can impact the employer’s brand, good will and place within the market,” she continued.

So how can employers ensure they are following the correct guidelines? Catherine has shared her advice to make sure you’re not overcompensating the new increased wages or underpaying your staff.

Become familiar with the NES

The national minimum wage and the National Employment Standards (NES) make up the minimum entitlements for employees in Australia. An award, employment contract, enterprise agreement or other registered agreement can’t provide for conditions that are less than the national minimum wage or the NES – they must include the NES. Employers should also ensure they provide every new employee with a copy of the Fair Work Information Statement (the FWIS) when they start their new job. Alongside this, every casual employee needs to be given a copy of the Casual Employment Information Statement (the CEIS) at the same time.

Refer to the Fair Work Ombudsman pay guide

To ensure employers understand how much each employee is entitled to be paid, the Fair Work Ombudsman places a significant focus on working with employers to ensure they understand their obligations. Employers can use Pay and Conditions Tool to calculate their employees’ wages, penalty rates and allowances.

Enterprise agreements and all-inclusive salaries

When employees are covered by an enterprise agreement, ensure that the base rates of pay provided under that agreement are at least equivalent to the new minimum rates of pay under the applicable award or the minimum wage order. Employers who use ‘all-inclusive’ salaries (such as via set-off clauses in their employment contracts or by using annualised salary arrangements) need to ensure that the salary “buffer” is sufficient to cover off all of the employees’ minimum entitlements each pay period, taking into account the increased minimum wages.

Get the right advice

The legislation around employment and fair work regulations are constantly evolving and it can be challenging to stay up to date on all your obligations as an employer. Employment lawyers specialise in staying across all the latest changes and will give you the right advice to ensure you are being compliant. For instance, as an advisory firm, BlueRock has a range of employment law experts who can assist employers and growing businesses in ensuring they meet the new minimums for their employees and how this can not only be a bonus for their employees, but as well as for their business.

Author – Catherine Stephens: Catherine is an experienced legal practitioner with over 15 years specialising in employment law and litigation.She is an Associate Director at BlueRock and heads up the employment law division of the La Trobe Street office. Catherine has a proven reputation for strengthening existing client relationships and is committed to achieving optimal results for clients with a commercial and creative strategy founded on an in-depth understanding of legal principles and client/stakeholder needs. She is also committed to the growth and development of her team and passionate about mentoring and supporting junior lawyers.