Annual Wage Review 2022-23

OWEN WEBB - AHA | SA WORKPLACE RELATIONS MANAGER

On 2 June 2023, the Fair Work Commission Annual Wage Review Panel (Panel) handed down their decision in the 2022-23 Annual Wage Review.

Modern Award Wages

The Panel decided to increase all modern award minimum wage rates by 5.75% effective from the first full pay period commencing on or after 1 July 2023.

In the last two Annual Wage Reviews, previous Panels had taken the view that there were exceptional circumstances that existed to warrant a delay in the commencement of the increase for awards in specific industries. The 2022-23 Panel were not of the view that any exceptional circumstances existed to warrant a delay in the increase.

The effect of the 2022-23 Annual Wage Review decision is that for those employees employed pursuant to Modern awards in the hotel and retail sector such as the Hospitality Industry (General) Award 2020, Restaurant Industry Award 2020, Registered and Licensed Clubs Award 2020 and General Retail Industry Award 2020, base rates of pay will increase by 5.75%.

To put the increase into context as an example, the rate of pay for any work performed between 7:00am to 7:00pm Monday to Friday for a casual food and beverage attendant wage level 3 classification under the Hospitality Industry (General) Award 2020 will increase from $29.40 per hr (inclusive of 25% casual loading) to $31.09 per hr.

National Minimum Wage

The National Minimum Wage (NMW) has since 1997 been aligned to the C14 wage rate in modern awards. The NMW does not set a floor for minimum wage rates in modern awards and the NMW order does not apply to employees covered by a modern award or an enterprise agreement. There is therefore only a very small proportion of the workforce (0.7% of employees) who are paid the NMW.

The Panel concluded in the 2022-23 Wage Review that the C14 wage rate does not constitute a proper minimum wage safety net for award/agreement free employees in ongoing employment. The Panel therefore decided as part of the Review to undertake two steps in relation to the NMW. The first was to end the alignment between the NMW and the C14 wage rate in modern awards and the second was to increase the rate of the NMW by 5.75%.

The effect of the Panel’s decision is that the NMW increases from $812.60 per week, calculated based on a week of 38 ordinary hours, or $21.38 per hour, to $882.80 per week or $23.23 per hour, effective from the first full pay period on or after 1 July 2023.

The change to the NMW does not affect the wage rates of those employed pursuant to a Modern Award or an Enterprise Agreement.

Considerations

The Panel as part of the Annual Wage Review process received submissions from various interested parties including state and federal governments, unions and employer associations.

The Australian Council of Trade Unions proposed a 7% increase to the NMW and modern award wages, whilst the Australian Chamber of Commerce and Industry supported an increase of up to 4% (3.5% plus the legislated 0.5% Superannuation Guarantee increase).

The panel noted that while submissions from interested parties had been taken into account in making its decision, ultimately it needs to make its own assessment of what constitutes a safety net of fair minimum wages having regard to the prescribed considerations.

In reaching their decision as to the quantum of the increase the Panel placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees to meet their basic financial needs. The Panel also considered the recent robustness of the labour market, and the fact that increases to modern award minimum wage rates will provide a disproportionate benefit to female workers and may contribute to narrowing the aggregate gender pay gap.

The Panel also considered the forthcoming increase to the Superannuation Guarantee contributions rate, the effect that an expected weakening in the labour market may have on casual employees and particular industries which have a higher proportion of modern award-reliant employees, the need to avoid entrenching high inflation expectations by taking a perceived wage indexation approach, and the recent weak performance in productivity growth.

Enterprise/Collective Agreements

Those members who have an Enterprise/Collective Agreement in place will be affected if the wages in their agreement are less than the minimum rates in the relevant modern award as at the first full pay period commencing on or after the 1 July 2023.

Individual Flexibility Arrangement (IFA)

If an Individual Flexibility Arrangement (IFA) is in place between an employee and their employer in accordance with a Modern Award or an Enterprise Agreement, members will need to review the IFA to ascertain whether any increase to the modern award wages affects the IFA. Remembering that an IFA must result in the employee being better off overall at the time the agreement is made than if the agreement had not been made.

Salary Arrangements

Members will need to review any salary arrangements which have been calculated in accordance with an applicable Award or Collective/ Enterprise Agreement to ensure the salary is sufficient in line with the relevant Award or Collective/ Enterprise Agreement provisions.

Wage Schedules

The AHA|SA has new wage schedules available reflecting the Panel’s changes to award rates of pay. The schedules are contained in the Workplace Relations Tab on the AHA|SA website. Wage schedules are available for the following Awards and Agreements:

• Hospitality Industry (General) Award 2020

• AHA|SA/LHMU Collective Agreement

• General Retail Industry Award 2020

• Restaurant Industry Award 2020

• Registered & Licensed Clubs Award 2020

A more detailed Wage Rate and Allowances Guide for the Hospitality Industry (General) Award 2020 and the General Retail industry Award 2020 has been developed and is also available on the AHA|SA website.

A summary of the Annual Wage Review 2022-2023 Decision can be viewed here.

SUPERANNUATION CHANGES FROM 1 JULY 2023

The Superannuation Guarantee percentage rate will increase by 0.5% on 1 July 2023 to 11.0%. The new rate will be applicable from 1 July 2023.

NEW FOOD SAFETY PACKAGE AVAILABLE

The AHA|SA has a new food safety package available for members. The package contains information to assist members with their food safety obligations, including requirements under the recently developed and approved Australia and New Zealand Food Standard code, Standard 3.2.2A – Food Safety Management Tools.

The Package is in an interactive PDF format and contains a range of food handling control procedures, standard operating procedures and a range of template forms that can assist with food safety record keeping requirements.

To download the package click on the food safety tab under Workplace Relations in the members only section of the AHA|SA website.