The Fair Work Commission (FWC) handed down its minimum wage review decision yesterday afternoon.
A number of employer groups, including the locally based South Australian Wine Industry Association, had in submissions lodged with the FWC argued that no wage increase to the minimum wage rate was appropriate.
The FWC has determined though that the minimum wage rate should increase by 2.5% taking it to $656.90 per week ($17.29 per hour) with effect from 1 July 2015.
A lower increase than last year was justified on the basis of changed economic conditions that have resulted in higher unemployment.
Business SA in its submission had encouraged the consideration of regional variations in adjusting minimum wages in accordance with a recommendation of the National Commission of Audit.
The FWC considered the submission in its decision noting that the recommendation was made after the following observation from the National Commission of Audit in its report entitled Towards Responsible Government:
“Having a single national minimum wage disadvantages workers attempting to gain a job in states like Tasmania and South Australia where wages and the costs of living are generally lower than in other States.
There are wide differences in wage rates between States. While the minimum wage is around 45 per cent of the Australian Capital Territory Average Weekly Earnings, it is around 65 per cent of Average Weekly Earnings in Tasmania.
The Commission recommends that a different minimum wage apply in each jurisdiction, with a transition period over the next 10 years. In particular, the Commission proposes the minimum wage in each jurisdiction be equal to the lower of the Minimum Wage Benchmark described above, or 44 per cent of Average Weekly Earnings in that jurisdiction by 2023. The wage would then increase in line with growth in that jurisdiction’s Average Weekly Earnings.”
In response the FWC decision identifies the inability to implement regional variations in modern award minimum wage rates as a consequence of the prohibition on the implementation of different minimum wage rates in modern awards by reference to State boundaries as contained in the FW Act.
The FWC perhaps mindful that the submission was prompted by the economic challenges brought about by the imminent closure of Holden’s also indicated that it has the power to delay the implementation of an increase to either the minimum wage or modern award minimum wages where there are “exceptional circumstances.”
It was not necessary for the FWC to determine whether there were grounds for a delay as neither the submission from Business SA or submissions from other employer groups argued that “exceptional circumstances” existed in South Australia.
In the circumstances the FWCs review decision will mean that the increase in the minimum wage (and modern award wage rates) of 2.5% from 1 July 2015 applies across the board.
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.