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Modern award increases – are you ready?

With the announcement of the increases to the National Minimum Wage and Modern Award pay rates earlier this month, the Fair Work Ombudsman is reminding employers to ensure that payroll systems are updated now in readiness for the increases.

As I’m sure you’re aware, the new wage rates take effect from the first full pay period on or after July 1. A 3.4% increase affects all Modern Awards while the national minimum wage rises to $589.30.

All draft determinations varying Modern Award minimum rates and draft updated wages tables for the National Training Wage schedule (which is attached to most modern awards) have been published while final determinations will be published on the Fair Work Australia website before 1 July 2011.

In the meantime, as an employer, if you are paying your employees by any Modern Awards or the national minimum wage, you must ensure that you increase the pay rates by the determinations. However, depending on the Modern Award, you may not have to pay the full increase straightaway. Many Modern Awards have transitional periods which give employers and employees time to adjust to the changes in pay rates (including loadings and penalties).

The transitioning period allows new pay rates to be phased in over four years until the full Modern Award rates apply from the first full pay period on or after 1st July 2014. However, as a matter of some urgency, you need to:

1. Check which Modern Award or Awards apply to your employees and make the appropriate adjustments.

2. Ensure your payroll systems are ready for the change for the first pay period on or after 1 July 2011.

3. Be aware that there are also increases in allowances under Modern Awards and an increase in minimum rates for juniors, apprentices, and trainees.

For employers who have implemented Individual Flexibility Agreements or apply annualized salary arrangements, you need to reassess these agreements to ensure that employees are better off overall when compared to the applicable Modern Award.

Another point to note is that while the High Income Threshold is currently set at $113,800, it is indexed each year and employers can expect changes to this figure again on 1 July. The announcement by the Department of Education, Employment and Workplace Relations (DEEWR) will be important as the High Income Threshold impacts unfair dismissal claim eligibility and any annual guarantee of earnings for employees.

If you are at all confused about how to implement any of these increases, you need to seek expert advice from an employment relations specialist.

Adrienne Unkovich is the Managing Director of Workforce Guardian – an online employment relations subscription service for Australian employers.

Disclaimer

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary for particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd is not responsible for the results of any actions taken based on information in this article, nor for any error or omission in this article.

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