From 1 July 2022 the National Minimum Wage and most modern award wage rates will increase from 1 July 2022, as a result of the Fair Work Commission’s ‘Annual Wage Review 2021-22’. The minimum wage will be increased by $1.05 an hour from $20.33 an hour to $21.38 an hour – that’s an increase of 5.2% which is significant in comparison to the 2.5% increase that the Fair Work Commission handed down last financial year.
Inflation is currently running at 5.1%, which has meant that wages went backwards by 2.7% in the last 12 months. The cost of living is rising twice as much as wages – as a result, the Australian Government made a submission to Fair Work Australia in support of a pay rise of 5.1% for those on the minimum wage.
What is the Australian minimum wage?
The minimum wage is an employee’s base rate of pay for ordinary hours worked and it is determined by the specific award that covers their industry or occupation. Each year, the Fair Work Commission reviews minimum wages received by employees in workplaces in Australia every year. Currently, the minimum wage is $20.33 per hour, or $772.60 per week (38 hours). From 1 July 2022 this will increase to $21.38 per hour, or $812.60 per week (38 hours). Workers on award rates will go up 4.6 per cent, with a minimum $40 weekly increase for workers on award rates below $869.60 per week. Unfortunately, workers in aviation, tourism and hospitality will need to wait until 1 October 2022 to receive this rise.
What does the increase mean for employer?
Employers need to review their employees rates now to ensure that they are equal to or above the applicable minimum wage rates! For many businesses, changes to costs and pricing isn’t as straightforward as passing on the costs to customers by way of a price increases – employers should take the time to discuss how to tackle these increases with their accountants before 1 July 2022. Accountants will also be able to help business owners ensure they are paying their employees the correct wages according to their minimum wage and award rates. Employers will also need to ensure their payroll systems are updated on 1 July 2022 to account for these wage increases.
What we suggest:
- Review your employees minimum wage and award rates via the Fair Work Australia website now – before 1 July 2022.
- Contact your Accountant to discuss how your business/company/trust can absorb the upcoming wage increases.
- Update your payroll systems before 1 July 2022 to include wage increases.
Contact Lana and her team at Matovic Business Accountants to discuss how National Minimum Wages might affect your business. Email us at info@matovicaccounting.com.au or call (07) 3557 5721.
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