Annual Wage Review 2020-21

OWEN WEBB - AHA|SA WORKPLACE RELATIONS MANAGER

On 16 June 2021, the Fair Work Commission Annual Wage Review Panel (Panel) handed down their decision in the 2020-21 Annual Wage Review.

The Panel determined that it was appropriate to increase the National Minimum Wage, awarding an increase to the National Minimum Wage and all modern award minimum wages of 2.5%.

However, the Panel determined that there were exceptional circumstances justifying a delay in the operative date of the increase for a number of awards, including awards in the accommodation, food services, aviation, tourism and retail sectors.

SUBMISSIONS

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

The Australian Council of Trade Unions (ACTU) proposed an increase of 3.5% to all minimum award wages, whilst the Australian Chamber of Commerce and Industry and Australian Industry Group proposed an increase of 1.1%.

The Panel took into consideration economic data from a range of sources including the Reserve Bank of Australia’s February and May 2021 Statements on Monetary Policy and the Australian Government’s 2021-22 Budget.

There was a general consensus amongst the various parties’ submissions, that the Australian economy was performing above expectations and that Australia was experiencing a strong economic recovery.

The Panel stated at paragraph 11 of their summary of decision that:

“The Australian economy has recovered to a greater extent and more quickly than anticipated.”

INCREASE IN MODERN AWARD WAGES

The Panel were not swayed to increase modern award wages by the amount proposed by the ACTU, stating that:

“… awarding an increase of the magnitude proposed by the Australian Catholic Council for Employment Relations (and the ACTU) in the present economic circumstances would pose a real risk of disemployment and of adversely affecting the employment opportunities of low-skilled and young workers.” 1

The Panel also acknowledge however that awarding an increase that was less than the increases in prices and living costs would:

“ … amount to a real wage cut. Such an outcome would mean that many award-reliant employees, particularly low-paid employees, would be less able to meet their needs. For some households such an outcome would lead to further disadvantage and may place them at greater risk of moving into poverty.” 2

The Panel in reaching their determination took into consideration the fact that the minimum superannuation guarantee percentage would increase by 0.5% from 9.5% to 10% from 1 July 2021.

Having taken into consideration a range of factors including the better economic conditions and the scheduled increase to the superannuation guarantee, the Panel reached a decision to award a 2.5% increase to all modern award wages. This increases the National Minimum Wage to $772.60 per week or $20.33 per hour.

COMMENCEMENT DATES & EXCEPTIONAL CIRCUMSTANCES

The Panel determined that despite the overall economic forecasts and current economic conditions, there were “exceptional circumstances” that warranted the commencement date of the increase being delayed for some awards in sectors where the economic recovery is still lagging.

The Panel determined that for the General Retail Industry Award 2020 (‘Retail Award’) it was appropriate that the increase comes into operation from the first full pay period on or after 1 September 2021. Whilst the Panel acknowledged that there were certain sectors of the retail industry that have performed well during the Pandemic such as supermarkets and homewares, ultimately there were other businesses covered by the Retail Award that have been and continue to be more adversely affected by lockdowns and potential lockdowns of short duration in the future.

In relation to most of the modern awards in the accommodation, food services, aviation, tourism, arts and recreation sectors, the Panel acknowledged that there were exceptional circumstances that warranted a delay in the increase. The Panel determined that for 22 modern awards including the Hospitality Industry (General) Award 2020 and Restaurant Industry Award 2020, the increase will come into operation from the first full pay period on or after 1 November 2021.

For all other remaining modern awards, the Panel determined that the increase would take effect from the first full pay period on or after 1 July 2021.

WAGE SCHEDULES

The AHA|SA will provide more detailed information to Members in upcoming Member Updates and Newsletters including updated wage schedules in due course.

Wage schedule will become available for the following awards and collective agreements:

• Hospitality Industry (General) Award 2020

• AHA|SA/United Voice (LHMU) Collective Agreement

• General Retail Industry Award 2020

• Restaurant Industry Award 2020

• Registered & Licensed Clubs Award 2020

ENTERPRISE/COLLECTIVE AGREEMENTS

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 applicable commencement date of the increase.

INDIVIDUAL FLEXIBILITY AGREEMENTS (IFA’S) & SALARIES

If an Individual Flexibility Agreement (‘IFA’) is in place, Members will need to review the IFA, in order to ascertain whether any increase may be applicable. Members will also need to review salaries which have been calculated in accordance with one of the salary arrangements within the applicable Awards or Collective/Enterprise Agreements to ensure the salary is sufficient in line with the relevant Award or Collective/ Enterprise Agreement provisions.

SUPERANNUATION INCREASE

Members are reminded that effective from 1 July 2021, the superannuation guarantee percentage increases by 0.5% from 9.5% to 10%. This is the first of a number of legislated increases which are scheduled to increase the superannuation guarantee from 9.5% to 12% by July 2025.

1 Fair Work Commission - Summary of Decision Annual Wage Review 2020-21, para [21]

2 Fair Work Commission - Summary of Decision Annual Wage Review 2020-21, para [22]