Annual Wage Review 2021-22

OWEN WEBB - AHA|SA WORKPLACE RELATIONS MANAGER

On 15 June 2021, the Fair Work Commission Annual Wage Review Panel (Panel) handed down their decision in the 2021-22 Annual Wage Review.

The Panel decided to increase the modern award minimum wages by 4.6% subject to a minimum increase for adult award classifications of $40 per week. The $40 per week increase is based on a 38-hour week for a full-time employee.

The Panel determined that there were exceptional circumstances that existed which justified a delay in the operative date of the wage increase for 10 Modern Awards in the aviation, tourism and hospitality 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 a 5.5 per cent increase to the National Minimum Wage (NMW) and modern award wages, whilst the Australian Chamber of Commerce and Industry and Australian Industry Group proposed an increase to minimum wages of between 2.5 and 3 per cent.

The Panel took into consideration economic data from a range of sources including the Reserve Bank of Australia’s May 2022 Statement on Monetary Policy and the Consumer Price Index over the year to the March quarter 2022.

Having reviewed the economic data, the Panel concluded that the changes in the economic context weighed in favour of an increase to the NMW and modern award minimum wages.

In reaching their conclusion as to the quantum of the wage increase, the Panel concluded that if they were to accept the proposed wage increases of the employer bodies it would result in a reduction in real wages for award reliant employees. Conversely, they accepted the need to constrain inflationary pressures that may arise from their decision and factors such as the 0.5 per cent increase in the Superannuation Guarantee rate and the removal of the $450 per month superannuation threshold from 1 July 2022.

INCREASE IN MODERN AWARD WAGES

In regard to the quantum of the increase, the Panel determined that there should be a proportionately higher increase to the lowestpaid employees, resulting in an increase to modern award minimum wages by 4.6 per cent subject to a minimum increase for adult award classifications of $40 per week. The effect of their decision is that for modern award minimum wage rates above $869.60 per week there is an increase of 4.6% and for wage rates below $869.60 per week there is an increase of $40 per week.

For the Hospitality Industry (General) Award 2020 (HIGA), the effect of the Panel’s decision is as follows (see table below):

To put the increase into context, for a Casual Food & Beverage Attendant Wage Level 2 classification under the Hospitality Industry (General) Award 2020 the rate of pay for ordinary hours Monday to Friday will increase to $28.46 per hr and for a Casual Food & Beverage Attendant Wage Level 3 the rate of pay for ordinary hours Monday to Friday will increase to $29.40 per hr.

COMMENCEMENT DATES & EXCEPTIONAL CIRCUMSTANCES

The Panel was satisfied that exceptional circumstances existed such as to warrant a delayed operative date for modern awards in the aviation, tourism and hospitality sectors. As a result, for 10 Awards which included the Hospitality Industry (General) Award 2020, Restaurant Industry Award 2020

and Registered and Licensed Clubs Award 2020, the commencement of the increase was delayed to the first full pay period on or after 1 October 2022.

The Panel was not persuaded however that there were exceptional circumstances that warranted a delay in the commencement of the increase for the remaining modern awards. For all other awards including the General Retail Industry Award 2020 the increase takes effect from the first full pay period commencing on or after 1 July 2022.

WAGE SCHEDULES

The AHA|SA will provide wage schedules for the following awards and collective 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 will also be produced for the Hospitality Industry (General) Award 2020, Restaurant Industry Award 2020 and General Retail Industry Award 2020.

A wage schedule and wage rate and allowances guide for the General Retail Industry Award 2020 has been developed and is available on the members section of the AHA website.

Wage schedules and pay guides for the Hospitality Industry (General) Award 2020, Restaurant Industry Award 2020, Registered and Licensed Clubs Award 2020 will be made available closer to the commencement date of the variation.

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 modern award 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.

HIGA Classification Level - Percentage Increase in Minimum Hourly Rate

Introductory - 5.2%

Wage Level 1 - 5.0%

Wage Level 2 - 4.8%

Wage Level 3 - 4.7%

Wage Level 4 - 4.6%

Wage Level 5 - 4.6%

Wage Level 6 - 4.6%

Superannuation Changes from 1 July 2022

INCREASE TO SUPERANNUATION GUARANTEE RATE

The Superannuation Guarantee percentage rate will increase by 0.5% on 1 July 2022 to 10.5%.

The new rate will apply to any superannuation payments made to employees on or after 1 July 2022, even if some or all the pay period is for work performed before 1 July 2022.

REMOVAL OF $450 MONTHLY INCOME THRESHOLD

The Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2022 (Amendment Act) commenced on 22 February 2022. The Amendment Act, amongst other changes, removed the monthly minimum income threshold for salary and wages to count towards the superannuation guarantee. The amendment is applicable from 1 July 2022.

So effective from 1 July 2022, the $450 monthly income threshold for superannuation eligibility will be removed which means that employees regardless of how much they earn will be eligible for superannuation payments.

The practical implication of this change is that some employees who previously would not have received superannuation payments for working a very minimal number of hours in a month will become eligible to superannuation payments.

FAIR WORK COMMISSION - HIGA & RIA SUPERANNUATION CLAUSE VARIATION

The Hospitality Industry (General) Award 2020 and the Restaurant Industry Award 2020 both currently provide a lower superannuation minimum income threshold provision of $350 in a calendar month. These are the only two modern awards with such a provision.

With the removal of the income threshold from the Superannuation Guarantee Act from 1 July 2022, the FWC has of their own motion varied these two awards to remove any ambiguity or uncertainty. The variation is simply to remove the reference to the $350 minimum income threshold. The variation will take effect from 1 July 2022.

EMPLOYEES UNDER 18 YEARS OF AGE

Irrespective of the removal of the monthly income threshold, employees who are under the age of 18 years will still need to work 30 hours or more in a week to be eligible to receive superannuation payments under the Superannuation Guarantee (Administration) Act 1992 (Cth) (Superannuation Guarantee Act).

If any members have any questions about these changes, please contact the AHA|SA Workplace Relations Team.